‘The New Normal’: Nursing Home M&A Is Being Shaped by Regional Operators, REITs, and Private Capital
•February 9, 2026
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Why It Matters
The trend signals a maturing market where investors favor stable, income‑generating assets, reshaping ownership structures and future growth pathways in senior care.
Key Takeaways
- •Regional operators acquire underperforming nursing homes
- •REITs drive higher‑valued SNF transactions
- •HUD refinancing used for cash‑out by top facilities
- •New construction limited; focus on turnarounds
- •Mid‑size operators dominate 2026 dealmaking
Pulse Analysis
The skilled‑nursing market entered 2026 on a surprisingly solid footing. Occupancy rates have risen steadily, and many states have lifted reimbursement ceilings, pushing a sizable share of facilities back into positive cash flow. Analysts note that these fundamentals are now strong enough to sustain acquisition activity even without further interest‑rate relief, turning financing costs into a secondary concern. As a result, investors view nursing homes less as a distressed asset class and more as a stable, income‑generating platform, reinforcing confidence across banks, REITs, and private equity.
Dealmaking reflects that confidence, with regional operators emerging as the most active buyers. Their intimate knowledge of local markets enables them to identify underperforming properties that can be turned around through operational tweaks and modest capital infusions. REITs, wielding deep balance sheets, are willing to pay premium prices for high‑performing sites, while private capital fills gaps for newer entrants lacking a long track record. An additional trend is the use of HUD‑backed refinancing, allowing owners of premium facilities to extract equity without relinquishing control, further tightening the supply of sale‑ready assets.
Despite the financing vigor, new construction remains scarce. Rising material costs and reimbursement caps make greenfield projects financially unattractive, prompting operators to prioritize refurbishments and acquisitions over building fresh capacity. Industry voices, however, warn that as acquisition opportunities near replacement cost, a construction resurgence could follow within the next five to ten years. Ensign’s recent announcement to expand its in‑house construction capability signals that at least some players are positioning for that eventual shift, suggesting a cyclical pivot from turnarounds to new‑build pipelines as demand forecasts solidify.
‘The New Normal’: Nursing Home M&A Is Being Shaped by Regional Operators, REITs, and Private Capital
The nursing home sector continues to demonstrate financial resilience, backed by strong fundamentals at the start of 2026, with financing activity and merger and acquisition trends reflecting cautious optimism rather than retrenchment.
Regional operators are snapping up struggling homes for turnarounds, while mid- and large-sized operators are driving ongoing consolidation in the market, according to financial experts.
“Regional operators, REITs, and private capital are actively shaping the future of skilled nursing through targeted investments and operational improvements,” Bluma Broner, Managing Director and Co-Head of Healthcare Banking at CIBC, told Skilled Nursing News.
Meanwhile, some owners of top-performing facilities are pulling cash out through refinancing with the U.S. Department of Housing and Urban Development (HUD) instead of selling.
“Market activity has slowed somewhat, with fewer deals available than in previous periods,” Broner noted. “High-performing facilities are commanding premium prices, often deterring buyers and leading some owners to exit through HUD financing.
Well-capitalized operators continue to seek opportunities to scale up and strengthen their market positions, she said.
“Struggling facilities are being acquired by regional operators who are familiar with the local market dynamics,” Broner said.
Moreover, the type of financing being sought points to a sector that is stabilizing and selectively repositioning for future growth, she said.
“Recent financing requests reveal two predominant trends: recapitalization of high-performing facilities and financing for the acquisition of underperforming ones,” Broner said, explaining that this dynamic reflects continued investor confidence in the industry’s long-term outlook.
Sector fundamentals
Improving fundamentals for skilled nursing facilities (SNFs) clearly underpin this confidence.
Steve Munn, Managing Director of VIUM Capital, told SNN that deal activity is no longer dependent on a dip in interest rates.
“With the increasing occupancy, reimbursement tailwinds, and overall improvement of the sector over the last 24 months, many acquisition opportunities are penciling at current rates,” he said, adding that any interest rate relief will simply expand the pool of viable transactions.
Broner agreed that sector fundamentals remain strong.
“Many states have increased reimbursement rates, and occupancy levels are recovering, which has contributed to a positive shift in profitability for many facilities,” she said. “As a result, a significant number of SNFs have returned to positive financial territory,” signaling that the sector’s financial health remains promising at the start of 2026.
New construction limited in favor of turnarounds
All in all, financing activity remains robust, with a clear preference for refurbishing and acquiring existing assets over new construction.
Operators are utilizing a range of debt products, including mezzanine loans and HUD-backed financing. However, new construction is notably rare, Broner said, suggesting that SNF operators are more focused on improving and repositioning existing assets rather than expanding supply.
Such sentiments were also echoed in the latest earnings calls from big players in the sector such as Omega.
And while reimbursement rates have have increased, they aren’t adequate to support new builds.
“The economics of new builds have become increasingly challenging due to rising construction costs and insufficient reimbursement rates, making it difficult for such projects to be financially viable,” Broner said. “Consequently, most financing activity is concentrated on upgrading current facilities, recapitalization and facilitating ownership transitions for assets that require operational turnaround.”
The lag in new builds won’t remain for long, Munn said.
“As attractive acquisition opportunities at prices below replacement cost start to diminish, I think we’ll start to see the next wave of new construction as operators start to look toward the future demand projections that are expected over the next 5 to 10 years,” he said.
To that end, Ensign has already announced its intention to pursue new construction in 2026 after beefing up its in-house construction capabilities in 2025.
Who’s buying what
Capital providers are playing differentiated roles in this environment.
REITs have emerged as the most willing buyers in the current environment, “often able to support higher valuations and drive larger transactions,” Broner noted. Meanwhile, private capital is playing a supportive role, particularly for newer operators who lack the track record required for traditional financing, she said.
From a buyer perspective, Munn believes mid-sized regional operators will dominate SNF dealmaking in 2026 because smaller owner-operators are exiting as pricing improves, while larger national operators are reducing their footprint.
“We are continuing to see small owner-operators exit the space as the bid-ask spread has started to tighten, and they can get the price they want to exit, while we also are starting to see some of the larger national operators divest assets in specific regions or states,” Munn said. “This sets the regional owner-operators up nicely to build on their portfolio now that they’ve been able to stabilize and return to the new normal.”
The post ‘The New Normal’: Nursing Home M&A Is Being Shaped by Regional Operators, REITs, and Private Capital appeared first on Skilled Nursing News.
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