As cap rates rise, AL prices stay
Last week, we wrote that while the average price per unit for IL communities fell by over $30,000 from the calendar year 2014 to the four quarters ending Q2:15, the average cap rate remained at 7.4%. Meanwhile, the inverse was true for the assisted living market. The average price per unit for AL communities rose slightly from $188,700 to $189,500, just a 0.4% change, over the same period, but the average cap rate rose 15 basis points from 7.75% in 2014 to 7.9% in the four quarters ending Q2:15. This could partially be explained by the fact that the IL market can be more mercurial than the AL market, as there is a more constant and stable need for assisted living. But to explain the rise... Read More »A tale of two earnings
What a difference a day can make. After Brookdale Senior Living’s meltdown in the market, when it ended Tuesday with a 7.1% drop in value on trading volume that was eight times the normal level, Capital Senior Living reported much more optimistic numbers. Occupancy was up 70 basis points from both the first quarter this year and the second quarter last year. June occupancy alone was up 40 basis points sequentially and was continuing to increase in July and August with some of their best move-in and deposit weeks ever. Its 2013 acquisitions are at 93% occupancy, and both the 2014 and 2015 acquisitions are at 95% occupancy. Apparently, they saw this coming with their activity in late March.... Read More »As prices fall, IL cap rates stay
The average price per unit for independent living had the most dramatic change of the other acuity classes (a 13% drop from 2014 to the 12-months ending June 30, 2015, compared to a 0.4% increase for assisted living and a 3% drop for skilled nursing in the same time period), so one would expect some move in average cap rate, presumably a move up. But, the average IL cap rate for the 12-months ending June 30 did not budge from its 2014 level of 7.4%. Perhaps the quality of IL transactions hasn’t changed, with owners of high-quality communities still tempted by the high valuations, but there just have not been as many of those ultra-high end sales this year. Read More »Brookdale’s Second Quarter Worse Than Expected
Occupancy continues to tumble at Brookdale Senior Living, but this time the legacy Brookdale properties post huge declines. When Brookdale Senior Living closed its acquisition of Emeritus exactly one year ago, they did not expect to be having the problems they are with the transition. A transition that was supposedly ahead of schedule last December. Brookdale’s first quarter this year was a big disappointment for investors. The second quarter was even worse. And the problem this time was not just Emeritus, which saw a 50 basis point decline in occupancy sequentially. The legacy Brookdale properties had a 120 basis point decline in occupancy in just one quarter, and they are now down 190... Read More »Average price for IL communities falls
How low can average independent living prices go? When the 2014 seniors housing M&A market hit unprecedented heights, in both value and volume, it was driven largely by an especially pricey independent living market, with the average price paid for independent living at $246,800 per unit, compared to $191,950 per unit in 2013. However, in the 12-months ending June 30, 2015 (according to a supplemental report to the 20th Edition of The Senior Care Acquisition Report), the average IL price fell to $214,500 per unit. What can explain this 13% drop? Either sales so far in 2015 have not reached the values seen in 2014, or many of the high-priced transactions of 2014 happened in the first... Read More »Schedule a demo
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