Buying and Selling CCRCs and IL Communities
Independent living is riding high and CCRCs have successfully emerged from the Great Recession. We know the independent living acquisition market has been hot, setting records in the past two years. And we know that occupancy levels are among the highest in the seniors housing sector, perhaps because there has not been a lot of new IL development, as least compared with assisted living and memory care. But CCRCs, or Life Plan Communities as some people would prefer to call them, have been making a strong comeback from the Great Recession and housing crisis. Who is buying these CCRCs and how are they valuing them? And how is the acquisition of a CCRC different from that of an independent... Read More »
The two Assisted Living markets
We first separated out the “A” properties from the “B” properties in 2012, based on the properties’ age, size and location. While there will likely be some “A” communities mixed in with the “B” communities (and the other way around), it all evens out. And when looking at the numbers, these are clearly two different markets. In 2015, “A” properties sold for an average of $248,500 per unit, while “B” properties sold for an average of $138,300 per unit, a difference of $110,200. That means that “A” properties were worth almost double the value of “B” properties. The previous year (2014) the difference was amplified even more. “A” properties in 2014 sold for an average of $244,800 per unit and... Read More »
Controversy Among The REITs
Opinions and controversy are all part of the game, but sometimes it can go too far. Some people think I speak my mind a little too frequently, but after 30 years in the seniors housing and care sector, it is hard not to have a lot of opinions. I have always thought that with so much news out there, and so much rehashed news, people want to hear what someone really thinks. It may not be popular, but if it based on experience and a lot of thought, well, then maybe it is worth something. Controversial? Sometimes, at least I hope so. But perhaps not as controversial as the current spat among some healthcare REITs about their decisions to spin off their skilled nursing portfolios, or not. For... Read More »Bucking the trend
Certainly one of the oddities of the over 70 statistics we provide in The Senior Care Acquisition Report was the relationship between the seniors housing (independent living, assisted living and memory care) cap rate and the 10-year treasury rate. One would expect that in a strong economy, the seniors housing cap rate would fall, while the 10-year treasury rate would rise, making the spread between the two smaller, and vice versa for a weak economy. However, as the seniors housing market has improved and cap rates have accordingly dropped from 7.7% in 2014 to 7.6% in 2015, the average 10-year treasury rate fell 40 basis points to 2.1%. The spread between the two rates thus increased from... Read More »
Pay up for profit potential
For the first time in five years, there wasn’t a perfect correlation between the average cap rate and the average price per unit in seniors housing (which includes independent living, assisted living and memory care), but it was close, according to the 21st Edition of The Senior Care Acquisition Report. This was an interesting year, however, where we saw a decrease in the average price paid per unit, and a decrease in the average cap rate. Accordingly, there were some interesting results. First, the two lowest cap rates both experienced decreases in their average price paid per unit (from $310,000 to $242,000 for 6% and $222,000 to $186,800 for 7%). Then there was an increase in the... Read More »Schedule a demo
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