While the rest of the world looks upon the skilled nursing sector as a business full of risk, we thought it may be instructive to take a look at the New York market, which we all know is a world unto itself. We recently reported on a sale in New York City of a 364-bed skilled nursing facility (details appearing in this issue) for $87 million, or $239,000 per bed. While not the highest sales price, it may be the highest price per bed, a least in recent memory.
In the past three years, there have been 13 sales that closed in New York with prices over $100,000 per bed, making it perhaps the most expensive state in the country, on average. But it gets better. When looking at the 18 SNFs and one portfolio currently under review with the state for change of ownership applications (pending sales), the average price per bed for the entire batch comes to $125,500. Of the group, nine are over $100,000 per bed, of which two are over $200,000 per bed.
This performance is not demonstrating the industry weakness we are hearing about everywhere else. True, there are several sales below $75,000 per bed, with the lowest at $34,500 per bed. The average Medicare census for the group is 13%, with a range of 3% to 25%. And, hold on to your knickers, the one with the lowest Medicare census has one of the highest prices per bed. The reason? It is huge and basically full (97% occupancy). So while we are all rightly concerned about the future of the skilled nursing business, at least in the short term, it isn’t all bad, everywhere.
