2014, the top-heavy year
As 2015 passed by and 2016 hits the half-way point, we are further reminded of just how extreme a year 2014 was, in terms of seniors housing pricing. This was yet again on display when looking at the price-per-unit spread between stabilized and non-stabilized assisted living properties from 2014 to 2015, according the 21st Edition of The Senior Care Acquisition Report. Stabilized assisted living properties in 2014 sold on average for $230,300 per unit, while non-stabilized properties sold for an average of $139,000 per unit, for a spread of $91,300. However, this spread greatly diminished in 2015 to just $61,500, with stabilized properties averaging $200,600 per unit and non-stabilized... Read More »The price of empty beds
Not surprisingly, buyers generally pay more for an already stabilized facility, but did the rise in high-acuity sub-acute/transitional care, which can often still be profitable despite an occupancy in the low-80s, lead to a price increase in what we call “non-stabilized” facilities (defined as having an occupancy under 85%)? Well, not in the skilled nursing market. Stabilized facilities saw a slight increase year-over-year, from $94,100 per bed in 2014 to $96,500 per bed in 2015. However, we saw a decrease in the average per-bed price for non-stabilized facilities, from $63,900 in 2014 to $54,300 in 2015. So, the spread between stabilized and non-stabilized grew from $30,200 in 2014 to... Read More »Buyers pass on premium pricing
We discussed earlier this week the two different assisted living markets, separated by “A” and “B” properties, but the difference was even starker in the independent living market. In 2014, a record year by all accounts for independent living, “A” properties sold on average for $277,900 per unit (boosted by a number of very high quality communities), while “B” properties averaged $155,200 per unit, a difference of $122,700. In 2015, the difference jumped to $170,400, with “A” properties selling on average for $243,300 per unit and “B” properties for just $72,900 per unit, which is low even compared to 2013’s average of $99,600 per unit. What accounted for this shift? In 2014, investors... 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 »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 »Schedule a demo
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