that much,” Lisa Widmier, EVP of CBRE’s senior housing capitalmarkets practice told podcast listeners. “But returns have gonedown to investors because of the fact that you can only get 50%leverage versus 65% leverage. In a logical world, debt is less expensive than equity. So the average cost of capital is impacting ourpricing.”
MISSING BUYERS
Perhaps the greatest issue, though, is the simple fact that manytraditional buyers are missing in action.
In the seniors housing market, private senior care providers usually comprise the majority of buyers but in this year’s third quarter,they accounted for only 63% of the deals, according to IrvingLevin data. Not-for-profit buyers were the next busiest group, with11% of deals, followed by private equity (9%), real estate investors(9%) and REITs (4%).
The private company O&M Investments was the only acquirerin multiple transactions during the third quarter, completing twodeals. The largest trade in the period, and likely the entire year, wasWelltower’s $702-million sale of a seniors housing portfolio in thewestern US. A joint venture between AEW Capital Managementand Merrill Gardens Senior Living bought the asset, which featured 11 properties across California, Nevada and Washington.
Skilled nursing deals represented a minority of third-quartermerger and acquisition activity—as they have during previousquarters—in terms of both transactions (41%) and properties(44%).
“Skilled nursing facilities bore the brunt of the pandemic,especially in the early months, and many owners are waitingfor operations to stabilize and to see what happens withfederal funding relief before considering a sale,”explained Swett.
Seniors housing deals made up the balance ofthe quarter’s transaction volume in the segment, with assisted living accounting for
34% of deals, followed by age-restrictedcommunities (12%), independentliving (7%) and CCRCs (5%).
