Average AL price deflates
Have we already seen the mountaintop when it comes to the average price per unit for assisted living sales? After four straight four-quarter periods of an average AL price per unit above $188,500 (topping out at $191,300 per unit in the four quarters ending Q3:14), that average has fallen to $183,600 per unit in the four quarters ending Q3:15. Now, to put that in perspective, the next highest yearly average was in 2012 with $164,000 per unit, so we have by no means plummeted from the peak (no bubble has burst either). But what may be true is that prices may have started falling back to earth a bit, and perhaps the highest quality portfolio sales have, for the most part, already taken... Read More »Third quarter posts record M&A results
There has never been a busier third quarter for mergers and acquisitions in the history of the seniors housing and care market. In Q3:15, there were a total of 87 publicly announced transactions (including both U.S. deals and a few Canadian deals), a 23% increase over the Q2:15 and a 2% increase over Q3:14. Keep in mind that the NIC Conference began at the end of the third quarter, so we have to assume that press releases on September 30 closings were delayed. The catch is that while the number of transactions has increased, the Q3:15 dollar volume of $4.1 billion is significantly down from last year’s third quarter total of $9.7 billion, a 58% drop. For more details on the third quarter... Read More »Seniors Housing: Build or Buy?
In this strong seniors housing acquisition market, when does it make sense to build a brand new community or buy an “A” quality community? Based on seniors housing construction projects since 2013 (which includes independent, assisted living and memory care, or some combination of the three), the average cost to build a new project is approximately $209,000 per unit. New construction, of course, comes with certain benefits. You will have a brand-new community with all the bells and whistles that can help attract attention. But you then have to fill it up, staff it and deal with the increasingly potential risk of a competitor opening up down the street. And to buy a stabilized, “A” level... Read More »A lot of building, but what’s the cost?
Taking a look at the NIC MAP® Construction Monitor as of Q2:15, which examines seniors housing construction in the Top 99 MSAs, we noticed on the AL side there were 22 MSAs with a construction vs. inventory ratio above 10%. If that doesn’t show a frothy development market, then what does? But, what is the cost to build in some of those MSAs? The Sarasota market, which has gotten a good amount of attention for its development pace, has eight assisted living properties under construction, and 893 units, representing a construction vs. inventory ratio of 30.7%. According to our data, which tracks senior living construction projects since 2013, majority-AL communities in the Sarasota market... Read More »SNF cap rates fall
The average price paid for skilled nursing facilities has largely leveled off at around $75,000 per bed, coming to rest at $74,100 per bed for the four quarters ending Q2:15, down from $76,600 per unit in 2014. But while prices have stayed largely the same, the average cap rate fell 40 basis points to 12.0%, a new record low. In the past 14 years (looking at calendar years), the previous record-low came at the top of the previous bull market in 2007 at 12.1%. And the rate at which the average cap rate has fallen is also stark, falling 100 basis points from 2013’s average. But if the overall trend this year has been that the market is cooling down from an especially frothy 2014, why are cap... Read More »Schedule a demo
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