We continue to observe the post-pandemic senior care M&A market with curiosity, with many crosscurrents of headwinds and tailwinds to make sense of. And our most recent valuation statistics, which includes prices and financials both publicly announced and confidentially disclosed to us, shed some light on the current
market.
First, the average price for skilled nursing facilities in the last four quarters soared 19% to $118,600 per bed from $98,000 per bed in calendar year 2021. Taking out the exceptionally high estimated price for Stonerise Healthcare’s SNFs, we still see the average price rising above $100,000 per bed for the four-quarter period. With more facilities coming up for sale and rising interest rates or recession fears putting off acquisitions for some buyers, we may see fewer bidding wars for both well performing and struggling facilities. But, the sector could surprise us too, especially with the recent positive news coming from CMS. Assisted living communities sold on average for $178,700 per unit in the last four-quarter period, down 4% from 2021’s average of $186,800 per unit. Tepid occupancy growth and rising labor costs plagued many of the communities put up for sale by weary owners or their impatient capital providers. SNFs go through those problems too, but AL communities just don’t have as much upside from case or payor mix that SNFs can take advantage of. That’s at least part of our reasoning.
Finally, the much smaller independent living market that can experience larger swings in average price experienced a 17% increase in price from $177,400 per unit in 2021 to $208,300 per unit in the last four quarters. More stable occupancy during the pandemic and lower levels of staffing made the sector a safer bet, but we will see how the growth of active adult as a sector affects IL in the long-term.
We will cover each sector’s changes in average cap rate in the coming weeks, and other updated, more granular valuation statistics will soon be available on LevinPro LTC’s Analytics page.
