Assisted Living prices hold steady
After the average price paid for assisted living rose from $150,600 per unit in 2013 to $188,700 per unit 2014, a 25% increase according to the 20th Edition of The Senior Care Acquisition Report, who would have expected that in these heady times in seniors housing, there would be virtually no change in the average price for the last two four-quarter cycles? Indeed, for the 12-months ending March 31, 2015, the average price per unit was $188,900 (up 0.1% from the 2014 Calendar Year), and for the 12-months ending June 30, 2015, the average price per unit was $189,500 (up 0.4% from 2014). Is this evidence enough that we have reached the top of the roller coaster? Or is demand still so strong... Read More »How are SNFs managing costs?
With all the talk of rising acuity in skilled nursing, how are operators going to manage the resulting rise in revenues and, of course, costs? Based on SNF sales in 2014 (according to The Senior Care Acquisition Report), the average expense ratio has fallen to a five-year low of 88.2%, or 50 basis points lower than in 2013. With this significant fall coming in tandem with the rise in average price per bed paid for SNF acquisitions in 2014, it is clear that buyers will pay a premium for a facility that better manages its expenses, especially in this higher acuity, higher cost market. Read More »Prices vs. Expenses
With the average price for independent living increasing at a faster pace than that of assisted living for 2014 sales, it makes sense that the spread between the expense ratio for IL and for AL would also widen. However, the change was bigger than expected. The expense ratio for IL decreased from 64.4% in 2013 to 61.0% in 2014, while for assisted living, the expense ratio actually increased by 260 basis points from 70.6% in 2013 to 73.2% in 2014, effectively doubling the basis point spread between AL and IL, from 620 basis points to 1,219 basis points. What could account for the higher average expense ratio for AL are the higher acuity levels and more memory care services. Read More »Impact of higher acuity patients in skilled nursing
With skilled nursing facilities on average selling for a record price per bed of $76,600 in 2014, surely the quality of the facilities sold was higher than in previous years. Probably the best measure of quality (and consequently the best explanation for the record-high prices) is the trend in average net operating income per bed. Since 2011, this figure has risen steadily, going from $6,500 per bed in 2011 to $8,950 per bed in 2014, which is a new record and 33% higher than the last peak in the skilled nursing market in 2007. Why this increased cash flow? For one, the industry is taking on higher acuity patients, with higher daily rates, and while the margins may not be expanding, the... Read More »High-quality IL properties drive prices
In 2014, we saw record-high average prices paid for seniors housing communities (which includes both assisted living and independent living). One observation was that those records were largely driven by a higher number of quality, well-run (and thus, high-priced) independent living communities coming onto the market, presumably by owners who wondered if there will ever be a better time to sell. One tell-tale sign of the high-quality independent living sales driving up average prices was the average net-operating income per unit when compared to that of purely assisted living. Based on 2014 sales, the average net-operating income per unit for independent living communities was $17,100,... Read More »Schedule a demo
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