Michael Knott reports that after a quiet year for the health care sector for most of 2016, an “explosion of deals” worth in excess of $5 billion has occurred recently. The trend underscores the significant amount of capital available for the sector, especially foreign capital.
Highlights include:
- Large transactions just took place in prior couple of weeks
- Indications are that there is lots of foreign capital available for such investments
- Skilled nursing coverage ratios are expected to continue to decline, with ramifications on how public market investors perceive these investments
- Seeing some excess supply issues in senior housing, particularly in secondary and tertiary markets
- Expect decelerating trend in cash flow growth, NOI, for senior housing operators, potentially pressure on pricing power
- Operating expense control has also been a challenge in senior housing