Highlighting a growing issue for the country’s aging skilled nursing facility inventory, a facility’s regional advantage may not matter much for owners of facilities in high barrier-to-entry markets looking to maximize value. Surprisingly, the Northeast region, because of its higher average income, property values and barriers to entry, saw the highest average cap rate of any region in 2015, at 13.3%. This is up 70 basis points from the average in 2014 of 12.6%, and up 90 basis points from 2013, when the region averaged the lowest cap rate in the country. Conversely, the North Central region, which has seen tremendous growth in skilled nursing development (buoyed by Mainstreet’s pipeline), saw the lowest average cap rate of 11.0%. The West followed with an average of 11.6%, then the South Central region (12.2%) and finally, the Southeast (12.7%). Yes, what matters in determining these averages are the actual facilities sold in 2015. But, the skilled nursing market appears to be becoming more stratified between old and new. Newer facilities, as long as they are making money, tend to be purchased with lower cap rates because the quality of the real estate is that much higher and it can attract Medicare patients better than the 25- and 40-year old facilities it will be competing against, almost no matter the location. Plus, a new building will have a longer shelf life, lowering its perceived risk level. It appears if you build in the coming years, they will come…from the other facility.