How Old Is Too Old In Seniors Housing?
For the first time in our Senior Care Acquisition Report (with the 23rd Edition just published), we decided to take a look at how investors priced in the risk purchasing a newer seniors housing community, versus an older one. As many of you know, the assisted living product did not develop in earnest until the 1990s, when at the end of the 20th century, the industry experienced a boom in development, mostly on the assisted living side. Since then, the tastes of seniors have changed, and what may have been a luxury “A” property in 2000 may not be one now. We have also more recently undergone a development boom, once again primarily in the assisted living/memory care sector. Many of these... Read More »
Pricing Age Into Seniors Housing Sales
It shouldn’t come as a surprise that in 2017, the oldest seniors housing properties (independent living and assisted living properties built before 2002) were valued the lowest and the newest properties (built after 2011) were valued the highest, according to the just-published 2018 Senior Care Acquisition Report. We see a similar correlation most years, but it is important to note that not all ages take into account renovations (and they would have to be substantial renovations and/or gut rehabs to change the effective age of the building) or additions (often of memory care units). However, it is generally true that in order to better compete in today’s senior living market, investors... Read More »
The Risk of Older SNFs
One would think that the newer skilled nursing facilities would sell with lower cap rates, but that has not always been the case. As can be seen in the graph below (from the just-published 23rd Edition of The Senior Care Acquisition Report), in three of the past five years those nursing facilities over 40 years old sold with the highest average cap rate, and in the two years when they didn’t, all the cap rates were closely clustered. The youngest nursing facilities (less than 20 years old) did not produce the lowest cap rates in many of the years, however. The main reason for this is that when some buyers look at the new skilled nursing facilities, they may be paying a high price per... Read More »
The Price of Age in Skilled Nursing
As most of you know, skilled nursing prices plummeted 18% in 2017 to $81,350 per bed, according to the 23rd Edition of The Senior Care Acquisition Report. But with that decline, did the age of the properties sold throughout the year have a significant impact? For obvious reasons, older skilled nursing facilities sell, on average, for a lower price than newer facilities. In 2016, there was a nearly perfect correlation between age and the price paid per bed. This did not occur in 2017, as the oldest group, those facilities more than 40 years old, sold for an average price per bed ($79,750) that was 26% higher than the next age group of 20 to 40 years ($63,000). Some of the older facilities... Read More »
Skilled Nursing Price Drops
When the average price per bed for skilled nursing facilities drops, the consistency in that drop is unparalleled. Here is something to ponder. We know that after a nice five-year run-up, the average price paid per bed in the skilled nursing market dropped by 18% last year, according to our new statistics. That was obviously a significant plunge, especially since the average had doubled in the previous five years. So, I decided to go back and see what happened in other years since 2000 when there was a drop. It turns out there were four years when there was a price drop of any significance. These included 2003, 2008, 2011 and 2017. What is weird is that the decline in each of those four... Read More »Schedule a demo
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