WASHINGTON, DC-Another day, another mammoth-sized health-care portfolio acquisition. This week Griffin-American Healthcare REIT II acquired 13-buildings known as the Pacific Northwest Senior Care Portfolio, plus an additional seven medical office buildings for $103 million. It follows by roughly seven days Health Care REIT’s announcement that it inked a definitive agreement to acquire Sunrise Senior Living for $1.9 billion.
The Sunrise Senior deal was the fourth M&A deal since 2010 involving a publicly traded US health-care REIT, according to SNL Financial analysis. Ventas was a chief player in this respect, acquiring Cogdell Spencer and Nationwide Health Properties in 2012 and 2011, respectively, for a total of more than $8 billion. Prior to those deals, Tiptree Financial Partners acquired Care Investment Trust in the second half of 2010, for $264 million.
Demographics are a driver behind the deals, to be sure. Consider the case of California, the highest-populated state in the Union, which is projected to see its population aged 70 and over grow by the largest amount over the next five years, SNL says. US equity REITs account for 272 health care properties in the state.
But there is also REITs’ easy access to capital that must also be factored into any such analysis, NAREIT vice president of research and industry information Calvin Schnure tells GlobeSt.com. Griffin-American is a nontraded REIT but they share several of the capital-raising characteristics of publicly traded REITs.
“The broad point is the quite strong acquisitions that REITs have been making over the past year or two, reflecting the core of their business model, which is easy access to capital,” Schnure told GlobeSt.com shortly after the Sunrise acquisition.
Indeed, in a separate analysis, SNL found that US equity REITs raised $35.27 billion in 2012 through Aug. 10--$3.82 billion more than the $31.42 billion raised in the prior-year period. By sector, health-care REITs had raised the most capital as of Aug. 10, with $7.7 billion.
“REITs have solid balance sheets and are able to raise more capital than a private sector firm in general,” Schnure says. “With their access to market financing they are able to buy when it makes sense—when a portfolio comes to market or the demographics say it is time to buy.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
