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The stage is about for 2025 to be a record-breaking 12 months for senior dwelling merger and acquisition exercise.
As of the top of September, the trade reached “new heights” with reaching a document breaking 733 publicly introduced offers over a 12-month span, in keeping with Irving Levin knowledge. For comparability, the trade had a complete of 717 offers at this level in 2024 and 518 in 2023.
Nevertheless, complete M&A greenback quantity isn’t maintaining tempo with the variety of offers occurring. Trade knowledge confirmed transaction greenback quantity at $11.9 billion between June 2024 and 2025, which is nicely under the $30 billion transaction quantity the senior dwelling trade notched in 2014.
Just one deal in 2025 – Welltower’s roughly $3.2 billion acquisition of the 38-community portfolio of Amica Senior Life in March – was sufficiently big to register as among the many trade’s prime 10-largest.
Serving to to create the flurry of offers this 12 months are bettering situations for M&A coupled with the truth that the monetary math for growth nonetheless doesn’t pencil out. A latest rate of interest reduce, a looming demographic wave and bolstered investor confidence are signaling a extra lively 12 months forward for senior dwelling M&A. All of the whereas, the hole between what consumers and sellers of senior dwelling communities need out of a deal is shrinking.
On this members-only SHN+ Replace, I analyze the variety of small offers going down, alongside present cap fee traits, and supply the next takeaways:
- How tailwinds are driving a extra lively senior dwelling funding 12 months forward
- Why buyers and REITs are choosing smaller transactions
- Latest smaller offers making up the M&A panorama in 2025
Surging M&A as investor sentiment shifts
Senior dwelling buyers are placing their cash the place their collective mouths are in 2025 and waiting for 2026. As they accomplish that, they’re selecting up properties with stabilized money flows, good hire progress and a location supported by demographics and low new provide.
A mix of things, together with a latest rate of interest reduce, are pushing senior dwelling buyers to hunt new offers and take present ones throughout the end line. In response to a fall 2025 senior housing outlook from Walker & Dunlop, a number of things are at present motivating sellers to make extra offers, together with cap fee compression, a basic must rebalance and prune portfolios, administration of debt maturities, a scarcity of recent growth, shifts to Medicaid.
Senior dwelling buyers anticipate extra cap fee compression forward as operators develop hire and income, in keeping with a latest survey from BBG Actual Property Companies.
One other boon to senior dwelling M&A is new HUD lending “categorical lane,” which is a “game-changer,” because of the means it could actually shorten historically lengthy HUD financing timeframes, in keeping with Walker & Dunlop EVP and Group Head of FHA Finance Ken Buchanan.
“With the categorical lane, these loans are processed and accredited by HUD inside 3 to five days in comparison with a historic common of 122 days,” he informed Senior Housing Information earlier in October.
The return of lending from government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac is one other boon for senior dwelling M&A, in keeping with Walker & Dunlop.
Because of all these traits, senior dwelling buyers have shifted away from utilizing misery as a main driver for brand spanking new offers.
“Sellers are predominantly exercising selection – maximizing proceeds, re-aligning methods, and leveraging improved debt choices – slightly than exiting below strain,” the Walker & Dunlop report’s authors wrote. “Patrons are paying for high quality, operator energy, and placement, with disciplined underwriting and a premium on velocity and certainty of shut.”
REITs get selective
In 2025 to this point, a number of REITs have sought to accumulate communities to enrich their rising SHOP segments, together with Welltower (NYSE: WELL), Ventas (NYSE: VTR), NHI (NYSE: NHI) and LTC Properties (NYSE: LTC).
Patrons, REITs included, are actually extra selective in what they purchase than they had been prior to now, in keeping with the Walker & Dunlop report. As they develop they’re generally breaking up and mixing communities into new or present portfolios to drive higher outcomes with the assistance of regional senior dwelling operators.
For instance, senior dwelling REIT LTC Properties (NYSE: LTC) final month acquired 5 communities operated by Lifespark for $195 million, representing solely a portion of the operator’s 46-property portfolio. The communities that modified fingers carry a median occupancy fee of 97%, and LTC administration believes they’ll assist bolster outcomes for its burgeoning senior housing working portfolio (SHOP).
Though its portfolio didn’t change fingers with the transfer, REIT Diversified Healthcare Belief (NYSE: DHC) took that technique when it sliced a 116-community portfolio previously managed below the 5 Star Senior Dwelling model into smaller extra manageable chunks with seven operators.
I additionally assume it’s essential to notice that a number of the senior dwelling trade’s bigger offers in recent times haven’t panned out in addition to consumers had hoped. As an example, Welltower (NYSE: WELL) CEO Shankh Mitra mentioned in the course of the firm’s most up-to-date earnings name that its 2021 acquisition of a portfolio of 89 Vacation Retirement communities valued at $1.58 billion has changed into “our greatest disappointment over the previous decade.” Mitra believes the corporate’s leaders erred within the portfolio’s preliminary execution plan and deal structuring, and the deal’s “failure” to date illustrates the problem forward for acquirers of huge portfolios
Trying forward, Walker & Dunlop sees “modest further cap-rate compression for core property the place bid depth stays 10 to fifteen gives.” Moreover, larger liquidity “ought to assist refinancings and acquisitions, reducing execution danger and widening purchaser swimming pools.”
It’s clear that senior dwelling trade tailwinds are pushing extra buyers to transact. It’s additionally essential to notice that growth stays powerful with the present state of building prices and underwriting. Till that dynamic modifications, it’s logical to imagine that buyers with cash to spend will select to deploy it extra into M&A alternatives.
