Although the skilled nursing industry — as much of the economy — appears to be in a constant state of flux given the ongoing COVID-19 pandemic and the election, one real estate brokerage firm says that the SNF merger and acquisition market is stronger than ever right now.
Evans Senior Investments has closed on $150 million of skilled nursing transactions since March, with another $170 million set to close before the end of the year, the firm told the McKnight’s Business Daily.
Many of these transactions involve older communities in rural parts of the country, which have been losing substantial amounts of operating cash flow, ESI Director of Valuations Kristopher Lowes said.
“Many owners we talk to on a daily basis believe because their census is down and their operating margins are lower than past years that their communities are worth less,” Lowes told the McKnight’s Business Daily. “Our experience in the market over the last six months has proven this is absolutely not the case.”
Lowes pointed to the many challenges smaller operators have faced amid the COVID-19 pandemic, including problems acquiring personal protective equipment and maintaining staffing. Larger operators, on the other hand, were able to use technology and scale to quickly pivot to new solutions.
Further, state-based regulations requiring a certificate of need make it very difficult to build new skilled nursing facilities in many areas. As a result, “larger operators are turning toward acquisitions to grow their portfolios,” Lowes said.
This article appeared in the McKnight’s Business Daily, a joint effort of McKnight’s Senior Living and McKnight’s Long-Term Care News.