In our quest to try to determine the truest “market cap rate” for the seniors housing market, for the first time in 2014 we decided to weight each transaction’s cap rate based on its number of units. For the seniors housing market (including both assisted living and independent living), whereas the average un-weighted cap rate in the last four years fell in two descending plateaus, the weighted average had a steadier decrease. In reality, it was a slightly steeper fall, with the unweighted average decreasing by 100 basis points from 2012 to 2015 and the weighted average decreasing by 110 basis points. As in all previous years, the weighted average cap rate in 2015 was lower than the unweighted average: 7.1% compared with 7.6%. The spread, at 50 basis points, is larger than 2014’s 30 basis points, but smaller than 2013’s 60 basis point spread. Plus, historically the spread has always been between 30 and 50 basis points, so 2015 was nothing out of the ordinary, other than producing a record-low weighted average cap rate.
A weightier fall
