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 »
Pay up for profit potential
For the first time in five years, there wasn’t a perfect correlation between the average cap rate and the average price per unit in seniors housing (which includes independent living, assisted living and memory care), but it was close, according to the 21st Edition of The Senior Care Acquisition Report. This was an interesting year, however, where we saw a decrease in the average price paid per unit, and a decrease in the average cap rate. Accordingly, there were some interesting results. First, the two lowest cap rates both experienced decreases in their average price paid per unit (from $310,000 to $242,000 for 6% and $222,000 to $186,800 for 7%). Then there was an increase in the... Read More »2015: A Year of Extremes?
We have mentioned previously that 2014 saw an unusually large number of high-valued transactions, with the extreme top-end prices driving the average seniors housing prices to historic levels, as well as pushing down cap rates to new lows. But in 2015, while there were proportionally fewer of both the highest-priced deals and the lowest-priced deals (see our April 13 blog post), it was a year of extremes for cap rates. In 2014, the two ends of the market (cap rates above 9% or below 7%) made up 24% of the year’s transaction cap rates. In 2015, cap rates over 9% made up 15% of the total cap rates, and those under 7% accounted for 27%, combining for 42% of the market. Clearly, the boost in... Read More »Schedule a demo
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