Despite multiple headwinds, assisted living prices hit record levels in 2017, while skilled nursing facility prices slumped for the first time in six years.
There is an interesting phenomenon going on right now in the seniors housing and care acquisition market. Both the skilled nursing sector and the private pay seniors housing side of the business are facing multiple headwinds. Yet, one side is seeing prices decline while the other keeps on going up, setting some new records on the way.
Last year, after five straight years of rising prices, the average price per bed for skilled nursing facilities plunged by 18% to $81,350. Your first question might be, what took so long? The average cap rate, however, barely budged, rising 10 basis points to 12.3%
In the assisted living market, the average price per unit hit a new record, topping $221,000 per unit. This was helped by the average cap rate dropping to 7.6%, with plenty of transactions in the 5% and 6% area. Buyers still want assisted living communities, figuring they will stand the test of time for demand-driven services.
Finally, while not a record, the independent living market also rose, passing the $230,000 per unit mark for an average. And the IL cap rate declined to an average of 7.0%.
Please join me tomorrow on our webinar where the panelists will decipher what really happened last year, and why, and what they think will happen in 2018 and beyond. See you then.
And Happy Valentine’s Day.
