The past year has been called by many in the senior living business “The Year of the REIT,” because REITs rushed in where private equity lenders feared to tread. And they didn’t just make acquisitions, they fueled large dollar amounts and forged partnerships with providers that give them the cash to expand in a tight lending market, ensuring these transactions will impact he senior housing market for years to come. In 2011, the overall dollar volume of publicly announced senior housing acquisitions topped $16 billion, about 40 percent higher than 2010, largely due to REIT activity, according to The Senior Care Investor.
Mergers and acquisitions of all sizes could be said to require some degree of skill to
close, but in big deals like these, with so many cogs and interests that need to be balanced, choosing the right partner, doing due diligence, and judging when to compromise or hold your ground rises to the level of an art. We asked some of the players in
recent large senior living transactions, both REITs and operators, for their thoughts on
how they did it, as well as general advice to others faced with similar opportunities.
When to
Walk
Away
Walking away from a
deal into which you have
already invested a lot of
time and energy can take
as much discipline as see-
ing one through complex
negotiations, says Ventas’
Debra Cafaro. Here are five
tips from her and the other
executives quoted in this
article on when to say no.
➊ The price is not right.
➋ The relationship does
not fit the growth profile of your company.
How to Look Like a Masterpiece
Senior living operators are now much more familiar with the reasons REITs have such
enthusiasm for their business. First, the sector, being needs-based, is one of the least
impacted by a recession real estate bubble burst of magnum proportions. Second, since
pre-recession construction was measured, senior housing does not have over-supply,
and with people inevitably aging and the first boomers passing age 65, the demand is
steady and growing. Third, assisted living and independent living are largely private-
➌ The value is not
enough to justify the
financial and time
costs needed to move
forward.
➍ The environment has
changed.
➎ Something new is
learned.
www.ALfA.ORG | MAY/JUNE 2012 | SENIOR LIVING EXECUTIVE 27
