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Foreign Investors, Private Equity Snapping Up Senior Housing Real Estate

Written by: Amy Baxter | Senior Housing News



With strong tailwinds buoyed by promising demographics, the U.S. senior housing industry has become very attractive not only to the traditional buyers of health care real estate, but also increasingly to private equity and overseas investors.


As health care real estate investment trusts continue to make strategic dispositions and refocus their portfolios, foreign capital is seizing acquisition and joint venture opportunities with some of the biggest senior living real estate holders, according to a report released this week from credit-rating company Fitch Ratings.


“Foreign investors are increasingly looking to invest in US healthcare real estate, particularly those with longer term horizons such as sovereign wealth funds, pension funds and insurance companies,” Fitch writes.


Buyers and Sellers in 2016


After record transactions recorded in 2015, REITs took a step back in their acquisition activity in 2016, instead becoming net sellers. Picking up the slack in M&A was private equity, according to Fitch.


The “Big 3” health care REITs—HCP Inc. (NYSE: HCP), Ventas Inc. (NYSE: VTR) and Welltower Inc. (NYSE: HCN)—have all announced major sales this year involving private equity groups, in some form, or sales with foreign buyers.


“The increasing role of private equity and foreign capital has been as much about them as it has been REITs selling,” Britton Costa, an analyst with Fitch Ratings, told Senior Housing News. “The largest REITs have been selling to reduce leverage and because equity via asset sales was cheaper than issuing new shares. We believe they have leverage where they’d like it so they have less motivation to pare their portfolios to the same extent.”


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University of Miami Life Science & Technology Park, a property under a US healthcare REIT. (Photo: Ventas REIT)



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