In 2016, buyers paid up for larger seniors housing communities (including independent living and assisted living) compared to 2015. We observed in the 22nd Edition of The Senior Care Acquisition Report that once again, the largest properties, with 150 units or more, still beat out smaller properties in price, averaging $226,200 per unit, 16% higher than 2015’s $195,600 per unit. Here is where the high-priced independent living communities that sold in 2016 exerted their influence in the overall market, representing a clear majority of the largest properties and pushing up the price. Communities with between 100 and 149 units came with a lower price than 50- to 99-unit communities, averaging $210,600 per unit compared with $213,200 per unit, although both values are around $20,000 per unit higher than in 2015. Memory care could have played a role in this difference, as the smaller communities (50 to 99 units) tend to feature it, and memory care tends to command a premium. The smallest properties (under 50 units) dropped in value from $157,700 per unit in 2015 to $126,600 per unit in 2016. Although specialized boutique memory care communities, which tend to be small (20 to 50 units) and charge more for their “home-like” atmosphere and more personalized care, posted higher prices, those small, “B” assisted living communities dragged the average back down.
Despite those changes in price, the average size of seniors housing properties sold has remained notably consistent since hitting a recent high of 103 units in 2011, increasing to 94 units in 2015 and 2016 from 91 units in 2014. What is interesting about this identical average of the past two years is that independent living communities (which are almost always larger than assisted living buildings) represented a significantly larger share of all properties sold in 2016 than in 2015: 21% versus 13%. So, to maintain the same average year over year, assisted living communities were much smaller in 2016 sales. This makes sense given the prevalence of memory care in the assisted living communities sold, which typically must be smaller to administer appropriate levels of attention and care to their residents. There were also more “B” properties, which are typically smaller, sold than “A” in 2016. Anecdotally, we hear from several operators and developers that the “ideal size” of an AL/MC community is around 90 units.
