A popular multiple that investors use to measure the value of a seniors housing and care property is the Gross Income Multiple (GIM). So, as prices have stayed consistently near record-highs for seniors housing (independent living and assisted living) properties, how much were buyers paying with respect to the properties’ revenues? In 2016, according to the 22nd Edition of The Senior Care Acquisition Report, the average GIM fell 15 basis points to 3.75x from the 3.9x recorded in both 2014 and 2015, widely considered the height of the seniors housing bull market. The median fell by a larger degree (30 basis points) and to a level not seen since 2011, when it was also 3.2x. Understandably, the top range of GIMs are from independent living communities, which command high prices but do not pull in the same revenues as most assisted living communities, albeit having higher operating margins. But if seniors housing prices rose in 2016, why did the GIM drop? This could be a sign of cooler heads prevailing, and not paying exorbitant multiples just to get a piece of a booming market. We also observed an increase in value-add deals, which may have had an effect.
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