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“Competitive.” “Selective.” “Robust.” “Hot.” “Momentum.”
These are some of the descriptions that leaders of senior living brokerage, investment, and lending firms used to describe senior living mergers and acquisitions (M&A) and investment activity at the midpoint of this year.
The industry is coming off a record investment year when dealmakers reported 21% more transactions in 2025 compared to 2024, and interest rates have not stopped the pace of senior living investment during a period of record-low new development.
Investors in 2026 are still seeking out Class A, stabilized properties that typically include a mix of independent living, assisted living and memory care. Now, they are eyeing opportunities in secondary and tertiary markets, depending on operator relationships and local market dynamics.
At the same time, capitalization rates are compressing in 2026, meaning that property pricing is rising faster than the rental income coming from properties. This trend typically signals higher investor demand and more available debt financing opportunities.
Interest rates not stopping deals
The senior housing sector entered 2026 with expectations for multiple interest rate cuts by the U.S. Federal Reserve, only for the U.S.-Iran war to send consumer prices higher, boosting cost inflation.
The annual inflation rate for the last 12 months ending in May was 4.2%, up from 2.4% reported during the same period last year, according to the U.S. Bureau of Labor Statistics. Energy costs have risen 23.5% this year, along with food prices rising 3.1% and housing increasing 3.4%, BLS data shows. The Fed likely won’t raise interest rates in August as inflation was the highest reported since 2023, and continues to see a “rate hike in September as very much in play,” according to a June 25 Reuters story.
These “mixed signals” have resulted in “very minimal impact” on acquisition appetite, underwriting standards or on deal pricing, according to Berkadia Senior Managing Director Ross Sanders.
“I don’t see an imminent major radical impact either way on policy or adjustment of interest rates,” Sanders said.
While Berkadia was unable to share specific transaction figures for this year, Sanders noted that the firm has closed “several billion” year-to-date with “a big pipeline” of future transactions lined up.
Investor appetite for new deals remained consistent this year despite the “unpredictable” nature of Federal Reserve activity, according to JLL Senior Managing Director Rick Swartz. JLL declined to disclose recent 2026 transaction activity.
Underneath the macroeconomic turbulence, the lending environment has become more competitive as the bid-ask spread gap narrows due to intense competition, according to SLIB Senior Managing Director Bradley Clousing.
“If inflation sticks around and they have to start raising rates, I don’t know that you can see any more spread compression that could offset where the 10-year [Treasury Bond] rate has gone,” Clousing said.
Signals and activity by the Federal Reserve “have become less a part of the conversation” in the last two years, according to Citrine Investment Group Founder Lynn Jerath. Instead, investors are enticed by market fundamentals and demand of the senior living industry.
“The big difference I see from the first quarter—or the beginning of the year—to now is the sheer interest in the sector that, in the last couple of years, might have been exploratory, and now it’s real,” Jerath said.
But still, uncertainty is not the friend of capital markets, and lenders must account for debt service coverage, Vium Capital Principal Steve Kennedy told SHN.
“I think that matters, and while I don’t think it stops deals, it could make lenders a little bit more cautious,” Kennedy said.
M&A momentum continues
Continued positive sentiment and new investors continue to spur momentum from the first quarter, despite macroeconomic uncertainty. The M&A landscape for senior housing is still a seller’s market, and Sanders said “not much” had changed as investors still seek out strong operators and stabilized properties. This is all driven by voracious “buyer appetite at the moment.”
Kiser Group Partner Mark Myers said this sustained momentum was the “woodwork effect” playing out where new investors come out of the woodwork trying to capitalize on strong senior living fundamentals.
“I don’t see any reason why it won’t pick up even further,” Myers told SHN.
Pricing for senior living transactions remains “consistent,” Swartz added, noting that by the time a transaction is completed, financial guidance is “usually more aggressive” than a broker’s opinion of value.
“That’s been the theme pretty continuously over the last six months,” Swartz added.
SLIB has closed 54 transactions as of mid-June, and the firm is on pace to reach the “highest [deal] volume we’ve ever had,” Clousing noted.
Activity for large and small firms chasing senior living investment has been successful in curating active pipelines. For example, real estate investment firm Stacked Stone Ventures will close on $150 million in new deals over the next 60 to 90 days. Since April 2025, Stacked Stone has completed $130 million in deal volume, with Founder Kent Eikanas estimating a potential for $250 million in new deals before the end of this year.
“There’s so much opportunity out there and there’s a lot of investors trying to get out and those that are trying to get in,” Eikanas said.
If anything has changed this year, it is the bifurcation of senior living transactions as a widening gap between premium assets and older properties, leading more investors to broaden their target markets to find new deals. Still investors value the age of the property, unit mix and design of a building, along with financial metrics like revenue per occupied room (RevPOR) as much as a primary market location, Clousing said.
“The appetite for Class A is very strong but as you break into smaller, older properties, the spread between the two has widened significantly,” Clousing added.
This spillover into smaller markets is driven by strong competition, Sanders said, bringing a “trickle-down effect” with investors now more open to secondary and tertiary markets depending on the operator and specific market.
“Secondary and even a bit of tertiary markets are getting more interest than they would have been a year ago,” Swartz said, but cautioned that where weakness still remains is in a building’s age or outdated design.
Conditions for development may be thawing
Senior living development is in a deep lull over the last six years, characterized by the high cost of construction financing and building materials, tied to the three to four year timeline a new project takes to get from entitlements to move-in day.
Six months ago, Swartz said JLL was “struggling to get interest” regarding new development in the sector, but today those conditions may be starting to thaw. Earlier this year, Senior Housing News tracked how some deals were beginning to trade hands above replacement costs.
He added that transactions selling above replacement costs “doesn’t seem to be a ceiling anymore,” driven by strong competition for stabilized properties.
While pro formas for new development remain “high,” Swartz said the firm was beginning to see inklings of new development sentiment return, with a “significant increase” in investor groups at least entertaining new development options.
“We’ve had equity investors approach us and say they want to get involved programmatically with a strong development-focused operator,” Swartz added. “I think people realize that if they wait another two or three years, there’s going to be a pretty strong wave of development, and then they’re going to be kind of on the back end of that.”
Seeing deals sell above replacement costs “starts the engine on new development” due to fierce competition and “a lot of equity that can’t compete to buy,” Sanders said. Later this year, he expects senior living investors to continue to seek “higher core-plus product” that will drive up pricing over replacement costs.
“I expect transaction volume to remain strong through the rest of the year, as well as new development pipelines to begin to increase,” Sanders added.