After a strong fourth quarter, merger and acquisition activity within the senior housing and care industries dropped precipitously to 77 deals in the first quarter of this year, according to data released this week from Irving Levin Associates. This number represents a 39% decrease from the 127 transactions in the previous quarter and is 26% lower than the 104 deals made public in the first quarter of 2020. 

Based on disclosed prices, the dollar value of all M&A transactions also fell to $1.49 billion, a 43% decrease from last quarter, the firm noted.

“Dealmakers unfortunately had to pause much of their work during the spring and summer of 2020, tabling many transactions and bringing very few properties to market,” Ben Swett of Irving Levin Associates said in a press release. “The latter in particular created a significant gap in the transaction pipeline that resulted in few deals ready to close by the first quarter of 2021. There are also ongoing issues in obtaining financing and third-party approvals in a timely manner, and buyers and sellers are still not always seeing eye to eye on pricing.”

Portfolio deals still were relatively prevalent in the first quarter, with 18 sales of three properties or more announced, accounting for more than 115 properties. That trails the fourth quarter’s 26 portfolio sales but far surpasses the eight recorded in the third quarter and 10 in the second quarter during the height of the pandemic. 

Two of the three largest deals were in the skilled nursing sector, including Larry H. Miller Group of Companies’ acquisition of Advanced Health Care Corp. and its 20 post-acute care facilities in eight states. The White Oak Healthcare REIT/Discovery Senior Living acquisition of 16 properties from Healthpeak Properties for $230 million marked the quarter’s largest senior living deal.

The data also showed that skilled nursing deals were far less popular than those in seniors living, representing just 32% of the quarter’s sales compared with 49% in the fourth quarter of last year. Assisted living and memory care made up the majority of senior living deals, at 47%, followed by independent living with 6.5% of the share, affordable senior housing with 5%, and active adult and continuing care retirement communities each accounting for 4% of the quarter’s deals.

“Federal and state relief has stabilized many skilled nursing facilities’ bottom lines. But some of that aid is already coming due, and with the successful distribution of the COVID-19 vaccines at facilities across the country, sellers and buyers should be ready to move forward with deals soon,” Swett added.