Paying For Stabilized Versus Non-Stabilized SNFs

Given the continual decline in census for the nation’s nursing facilities, it is no longer clear where “stabilized” is in today’s market, especially as lengths of stay have shortened. For your reference, we have traditionally defined stabilized occupancy for skilled nursing facilities as 85% and higher. With that said, nursing facilities with stabilized occupancy declined in value from an average of $114,700 per bed in 2016 to $93,700 per bed in 2017, according to the 23rd Edition of The Senior Care Acquisition Report. This makes sense given the overall deterioration of the market in 2017.

For non-stabilized nursing facilities, the reverse occurred. While it might be counterintuitive that non-stabilized properties would rise in average price in what was a down year, the reason was that there were more opportunistic, or “value-add,” buyers in the market paying higher prices for underperforming properties. Obviously, “higher prices” is relative, as the prices were still not high and averaged $77,750 per bed for the non-stabilized facilities. But this was a big jump from the $55,050 per bed paid in 2016.

 

 

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