Senior care concentration
Recently, US real estate investment company Health Care Property Investors (HCP) acquired CNL Retirement properties. The $1.6 billion wasn't big by standards in some industries, but it creates the largest collection of senior-care facilities (retirement homes and nursing homes) as well as medical buildings in the US. That fragmented industry is starting to consolidate for the same reasons that almost every other industry has seen mergers and acquisitions: economies of scale, more political clout, and increased profits (at least for the executives). It also means the ability to better manage relationship with service suppliers and with insurance companies.
A Wall Street Journal story (Health-Care REIT to Buy CNL For $3.6 Billion, 5/3/06) quotes one analyst as saying this a good bet just on simple supply-and-demand factors, since the number of over-85 seniors is increasing at a rate of 3% annually, while the amount of senor housing is growing at only 1 or 2%.
The deal will give HCP more than 800 properties in 44 states. It owns the properties and hires other companies manage them, including American Retirement Corp., Horizon Bay and Sunrise Senior Living Inc.
And as the retirement home properties segment consolidates, so does the management sector. The abovementioned American Retirement Corp. has announced that it will be acquired by rival Brookdale Senior Living Inc. in a $1.2 billion deal. That transaction was announced a few weeks after the HCP/CPL deal. The deal will make Brookdale the largest manager of senior care facilities n the US, managing 535 facilities in 34 states.
The deals are small but the pattern is clear. Oligopoly extends into old age and past death. The move of concentrated industries is relentless.
