The average seniors housing (independent living and assisted living, combined) cap rate resumed its downward trend that began after the Great Recession and strayed only one year (in 2016), hitting a new record low too, at 7.5%, according to the 23rd Edition of The Senior Care Acquisition Report. However, when weighted by units, the average seniors housing cap rate dropped even more significantly year over year, from 7.1% in 2015 (the previous record-low) to 6.6% in 2017, which was a full 90 basis points lower than the unweighted average for the year. What has changed year over year to merit such a drop? As always it comes down to the quality of properties sold during the year, with 2017 recording a higher proportion of both newer and stabilized communities selling, particularly among the larger IL communities and seniors housing portfolios, which had a heavier influence on the weighted cap rate.

As occupancy issues have not plagued the independent living market to the extent of the assisted living market (which most recently hit a new recent low of 87.9%), those larger communities potentially did not come with as much fill-up risk. Staffing those communities is less of an issue as well, which is potentially a long-term risk for the assisted living market.