On October 13, our editor Steve Monroe moderated a webinar called “Skilled Nursing: Buying, Selling & Valuing,” with panelists Ben Atkins, Chairman of Traditions Senior Management, Charles Bissell, Executive Director of Integra Realty Resources, Ben Firestone, Senior Managing Director & Founding Partner of Blueprint Healthcare Real Estate Advisors, and Stephen Graham, SVP/Director of Post-Acute Acquisition & Development of MedEquities Realty Trust. During the 90 minutes, we posed two poll questions to our listeners and got some interesting results. First, in response to “Should high acuity, subacute SNFs sell with a higher or lower cap rate than more traditional SNFs?,” 55% of our audience said “higher,” and 45% said “lower.” A little later on, we asked, “Do you think UPLs (Upper Payment Limits) should be expanded to more states or removed?” The response was slightly more even, with a slim 53% majority believing they should be removed. Didn’t get to vote? Post your answers in the comments section below!
And the vote is in…
Interesting poll question. I’ll need to try to listen to this one. Would have liked to have been on the call. I think I would answer this question with it depends. Typically we look at where the price per bed is shaking out. If you are north of say $150,000 a bed, I think a higher cap rate is warranted due to the higher risk associated with the higher than typical revenues. However, if the subacute facility is not performing as well, a more typical cap rate may be considered. May not make sense to double hit it, with a high cap rate also. My 2 cents, love the email basts and market commentary.
I agree that it often “depends.” A lot of times the higher priced sales are new buildings, so there is also the opinion that they will stand the test of time better than older buildings that happen to have a strong Medicare census today.
Steve
Wonderful post however , I was wondering if you could write a
litte more on this topic? I’d be very grateful if
you could elaborate a little bit further. Thanks!
I actually elaborate a lot on these things in The SeniorCare Investor newsletter. Do you not subscribe?