Total volume in the first Quarter of 2017 totaled $4.4 billion, an increase from the previous quarter driven primarily by a few large deals that closed in the early months of the year.

Blackstone’s $1.125 billion acquisition from HCP (NYSE: HCP) of 64 properties leased to Brookdale Senior Living (NYSE: BKD) made up roughly a quarter of that volume. Blackstone also purchased a Senior Lifestyle portfolio for $747 million from Welltower (NYSE: HCN).

“The surprising part was not the fact that institutional buyers were acquiring properties,” NIC Senior Principal Bill Kauffman told Senior Housing News. “But somewhat of a surprise was the large amount that the institutional buyers represented in Q1, which was significantly more than the previous quarter, and more than we have seen in a while in terms of representing a significant portion of the Buyer volume.”

For reference, the start of 2016 also saw $4.4 billion in deals closing. Last quarter, senior housing transaction dollar volume was $2.3 billion, marking a weak end to the year.

REIT action slows

Continuing a 2016 trend, public companies such as REITs were less active buyers in the first quarter. Volume attributed to these companies fell 36% to $421 million. That’s down from an already anemic volume of $657 million in the fourth quarter of 2016, NIC reported.

Public buyer volume was at $920 million in the first quarter of 2016.

“I think the trend is clear,” Kauffman said. “Public REITs have become more of a seller over the past year, year and a half.”

Public companies currently only represent 9% of total buyer transaction volume. REITs have backed off buying for several reasons, such as cost of capital increases, new construction coming online, and higher property prices, Kauffman noted in a Thursday blog post.

Institutional buyers like Blackstone and international investors have stepped up to acquire some of the REIT assets. Institutional buyers now make up 61% of buyer volume, a seismic change from only 15% of that volume in 2015 and 31% in 2016.

Purchases by private buyers, such as private REITs and private partnerships, declined by 26% from last quarter. Still, this was the 15th consecutive quarter with private closings totaling $1 billion or more.

Written by Tim Regan

The post NIC: Big Deals Boost Senior Housing M&A in First Quarter appeared first on Senior Housing News.