Lower Expenses, Higher Prices
One would assume that as a skilled nursing facility’s profitability increased, so should its price. And that was indeed the case in 2015, with a perfect correlation between the average price per bed and the expense rate. Facilities with an expense ratio of 90% and over sold in 2015 for an average of $46,000 per bed, while those with expense ratios between 85% and 89% sold for $75,000 per bed on average. The high end of the market, meaning those facilities with expense ratios under 85%, not surprisingly sold for the highest price, averaging $128,100 per bed in 2015. Clearly, well-operating skilled nursing facilities are very attractive to investors in search of a high return, at least when... Read More »Quantity over Quality?
What is the added cost of purchasing a portfolio of assisted living communities versus single-facilities? That is a question we try to answer in our Senior Care Acquisition Report (now in its 21st Edition). Now, there is no guarantee that a buyer will pay more for a portfolio of properties, but rather, the premium has to do with both the number of properties and the quality. For statistical purposes, we define “portfolio” sales as those sales with three or more properties. Most years, there is a sizeable difference between the average price paid for portfolios compared with smaller purchases. In 2015, we recorded one of the largest premiums in recent years of $47,600 per unit, or a 30%... Read More »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 »Schedule a demo
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