Second Quarter M&A Soars Above 100 Deals
Boosted by an especially strong April, senior care M&A in the second quarter skyrocketed above 100 transactions for just the second time ever, according to DealSearchOnline. The industry seemed to be in a deal slump over the past year and a half, never surpassing 81 deals in a quarter and falling way off the pace set in 2015 when we recorded 99 deals in Q3:15 and 108 deals in Q4:15, the all-time record. However, this April set the tone for the quarter with 47 deals announced. Activity petered out a bit as the quarter wore on (35 deals in May and just 22 in June), but that could be the effects of the summer lull. Either that, or everyone was deal-ed out by Memorial Day. In the end, we... Read More »
Buyers Paid Up For Larger Seniors Housing Communities
According to the 23rd Edition of The Senior Care Acquisition Report, the average price paid per unit rose for all size groupings of seniors housing communities sold in 2017, which includes independent living and assisted living properties. Once again, the larger seniors housing communities commanded the higher prices (averaging $260,100 per unit), as these institutional properties can take advantage of scale to increase cash flow, and thus value. The smallest properties accounted for the smallest average price per unit, at $167,300, and are typically made up of smaller, “B” properties. However, this grouping also includes boutique memory care communities that, while small, charge more for... Read More »
Skilled Nursing Prices Slide Up With Size
There was a perfect correlation between size of skilled nursing facility sold and the average price per bed in 2017. In general, the smaller the nursing facility, the lower the price, and the larger the facility the higher the price. In 2016, the correlation existed except average prices declined for those facilities over 180 beds in size, according to the 23rd Edition of The Senior Care Acquisition Report. In today’s market those nursing facilities with fewer than 80 beds usually command the lowest average price. In 2017, that average price was just $53,750 per bed, down 13.5% from 2016. There was a significant percentage jump in average price for those facilities with between 80... Read More »
Cash Flow Pushes Up Seniors Housing Prices
Many buyers prize a community’s cash flow over many other factors when looking for relatively safe investments that can provide returns to their capital providers. The past three years haven’t reached the record set in 2014 of $14,200 per unit, but in a year where the average price per unit for seniors housing (independent and assisted living) increased, it makes sense that NOI per unit would increase in turn. Driving the NOI per unit up to the $14,200 per unit mark was the assisted living sector, which accounted for 23 of the top 25 recorded values, and very high NOI per unit results, per the latest Senior Care Acquisition Report. The improved existing cash flow seems to have outweighed... Read More »
Cash Is King For Skilled Nursing Targets
When buyers value a skilled nursing facility, or any senior living property, it is always the absolute level of cash flow (NOI) that matters, not the operating margin or expense ratio. Buyers are purchasing a stream of net cash flow, and that net cash flow is going to provide the returns to capital providers. As long as cap rates remain stable, which they certainly have in the skilled nursing sector, when cash flow increases, the prices paid increase. From 2008 to 2015, the average cash flow per bed of SNFs sold increased by 63% (peaking in 2015 at $9,600 per bed), and this was driving the five straight years of record average prices for skilled nursing facilities, according to the 23rd... Read More »Schedule a demo
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