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Senior living companies, including Welltower, Ventas, and National Health Investors, are preparing to invest significant amounts in new growth ventures in 2024 and beyond. CEOs have outlined their plans during recent earnings calls, with a focus on expanding senior housing portfolios and capitalizing on emerging opportunities in the market.
Despite favorable conditions, some companies, like LTC Properties, have faced challenges in finding suitable investment opportunities. The current landscape presents both opportunities and obstacles for companies looking to grow through mergers and acquisitions in the senior living sector.
In this week’s SHN+ Update, we delve into the strategies of public senior living companies, explore the reasons behind REITs’ cautious approach to M&A opportunities, and analyze the future prospects for growth in the industry.
REITs execute on growth strategies
Public REITs, such as Welltower and Ventas, have expressed optimism about their investment plans for the year ahead. Despite facing challenges, these companies have continued to make significant investments in senior housing properties, aiming for sustainable growth in the coming months.
Welltower, for instance, has already invested billions in 2024, focusing on high-quality senior housing assets with attractive economics. Similarly, Ventas is actively building its senior housing portfolio and exploring new acquisition opportunities to drive growth.
While some REITs, like LTC Properties, have experienced slower transaction volumes, others, such as National Health Investors and Omega Healthcare Investors, have closed on substantial investments in the second quarter of the year.
As REITs navigate the current market conditions, they remain selective in their investment decisions, prioritizing deals with low cost bases and favorable valuations. Despite facing challenges, these companies are positioned for potential growth opportunities in the future.
Early stages of a hot cycle
The senior living investment market is currently in a state of equilibrium, with challenges in development and interest rates stabilizing. The industry awaits potential rate cuts, which could stimulate M&A activity and fuel growth in the market.
“We’re in the early days of exceptional growth for several years to come.” – NHI CEO Eric Mendelsohn
While uncertainties remain, industry experts anticipate a more active M&A market if sellers and buyers can align on pricing and market conditions improve. The potential for rate cuts and a normalized bid-ask spread may lead to increased activity in the senior living sector, paving the way for a period of significant growth in the industry.
