Unlocking the Next Senior Living M&A Cycle: Why 2025’s ‘Perfect Storm’ Is an Opportunity

The New Era in Senior Living M&A

2025 has ushered in an unprecedented convergence of market forces setting the stage for robust merger and acquisition (M&A) activity in the senior living sector. Low new supply, surging demand, solid rent growth, and continued occupancy gains have combined to create the “perfect storm” for senior living transactions. As a result, billions of dollars in sidelined capital are being unlocked, enabling a fresh cycle of dealmaking for operators, investors, and owners.

Key Drivers of the Market Surge

• Limited New Supply & High Demand: New development in senior living remains subdued, but demand continues to accelerate—particularly as the baby boomer wave moves through the system. This gap is driving valuations, as assets now often trade below replacement cost, and occupancy rates are at multi-year highs.
• Investor Optimism & Capital Accessibility: Despite macroeconomic turbulence—interest rate volatility and tariff uncertainty—investor appetite is growing. Available, less-expensive debt, along with a $382 billion global pool of “dry powder,” is poised to move off the sidelines, creating the foundation for a major growth cycle.
• Operational Improvements: Industry operators have delivered improving margins, higher revenues, and stronger occupancy, outpacing other real estate sectors in recent quarters. Assisted living and memory care are leading this activity, attracting the bulk of investor attention and capital.

What Makes This Cycle Different?

• Shift From Distress to Core: M&A activity is no longer dominated by distressed sales. A growing share of transactions now involve stabilized, high-quality, and even portfolio assets—attracting a broader base of institutional and private capital.
• Record Transaction Volumes: First quarter 2025 saw $5.79 billion in transactions—a 75% increase over Q1 2024, with a record 703 publicly disclosed deals in 2024. This trend is accelerating, with a shift to larger, multicommunity portfolios instead of isolated, one-off deals.
• Focus on Core and Core-Plus: According to Cushman & Wakefield, 43% of surveyed investors are targeting core-plus assets, with only 13% still chasing distressed or value-add opportunities. This shift signals a more mature, competitive market landscape.

Headwinds and The Need for Strategic Navigation

• Labor & Immigration Headwinds: Tight labor markets, a lack of new immigration, and policy uncertainty present ongoing operational challenges, particularly in hiring and retention for care roles.
• Macroeconomic Volatility: Interest rates, tariff policy, and general economic swings continue to pose risks. Operators and investors must stay vigilant, using strategy and risk management to weather any surprises.
• Separation in Asset Pricing: The market is increasingly bifurcating between quality, stabilized ‘Class A’ assets and riskier distressed or turnaround properties, driving a pronounced pricing gap.

Looking Ahead: Outlook for 2025 and Beyond

• Healthy Transaction Pipeline: The industry is set to see continued high transaction volumes in the second half of 2025. Financial and capital markets are supporting this momentum as debt becomes increasingly accessible.
• Portfolio Deals on the Rise: Larger, multi-asset portfolios are becoming commonplace, further advancing consolidation and efficiency in the sector.
• Stabilized Assets in Focus: Investors are prioritizing stabilized assets with consistent cash flow, substantially reducing exposure to underperformance and operational volatility.

Why Sherman & Roylance?

Sherman & Roylance stands at the intersection of market expertise, national reach, and tailored advisory services for owners, operators, and investors in skilled nursing and senior housing. Our deep experience and bespoke transaction process ensure every client gets the right strategy in this rapidly evolving landscape.

If you are considering buying, selling, or repositioning your senior housing investment, now is the time to partner with a team that understands this “perfect storm.” Let’s unlock new value together—confidentially and strategically.

Contact Sherman & Roylance today to discuss your M&A objectives and capitalize on emerging opportunities in senior living.