Wall Street is long on grannies says an article from the Economist.
According to the article, there have been 46 acquisitions of nursing home operators worldwide since 2005 says Dealogic, a research firm. Private-equity firms now own three of the five largest chains of homes in the United States, including the biggest, HCR ManorCare, which was bought by Carlyle for more than $6 billion in 2007.
While senior housing might not be the most sexy part of private equity, the industry sees opportunity as people are living longer and the operations generate steady cashflows. Since much of nursing home revenue comes from government reimbursements, they’re typically not hit as hard during downturns says the article.
An executive at a buy-out firm which has decided not to purchase nursing homes explains why: “They come with reputational headaches, because no matter how well you run one, something is going to go wrong.”