What’s the portfolio premium?
Historically, buyers will often pay up for a portfolio (which we have defined as three or more properties in a single transaction) as opposed to a single facility. The “portfolio premium” has to do with both quality and the number of properties. Of course, not every buyer will pay more for a facility just because it is part of a portfolio, nor is the quality always inferior at a single facility. Still, according the 20th edition of the Senior Care Acquisition Report, in 2014, assisted living portfolios were valued on average at $206,000 per unit (compared to $153,900 per unit in 2013), while other sales averaged $172,700 per unit (144,000 per unit in 2013). That represents a premium of... Read More »Where’s the beef?
There’s a lot of talk of hot, new technologies in the senior care industries that are poised to revolutionize delivery of care and drastically improve the lives of residents. But which of these innovations will be a flash in the pan, and which will show results? One serious issue that many seniors in assisted living face is the loss of strength and balance from a relatively sedentary life. One company, HUR, has developed computerized SmartCard exercise machines to help combat that loss of strength. Studies have shown that progressive resistance and balance training can significantly reduce the number of falls, and by increasing resistance by quarter-pound increments, the HUR machines make... Read More »What’s the memory care premium?
What is the premium paid for memory care in today’s seniors housing acquisition market? We have noticed in the last two cycles that at the beginning of the bull markets, traditional assisted living is typically priced higher than communities with a memory care component, then the reverse is true as the bull market strengthens or hits its peak. And given the extraordinarily high values we saw in 2014, we may have already been to the mountaintop. Accordingly, buyers paid a significant premium for assisted living with a memory care component, with $215,100 per unit compared with $138,500 for traditional AL in 2014 (according to the 2015 Senior Care Acquisition Report). What is interesting is... Read More »Independent living prices fall
When looking at the average price per unit and average cap rates for the 12 months ending March 31, 2015, most everything stayed the same compared to the 2014 calendar year. This is contrary to the fairly consistent rise in prices and fall in cap rates over the last several years. However, two things stood out. First, the average skilled nursing cap rate fell by 20 basis points from 12.4% to 12.2%. And second, the average price per unit for assisted/independent living fell 4.5% from $208,200 to $198,800. Considering the average price paid per unit for assisted living stayed roughly the same (up $200 to $188,900 per unit), that change came largely from a drop in prices for independent... Read More »The Aging of Skilled Nursing Facilities
The skilled nursing market is clearly aging when facilities 20 years and older make up about 87% of the transactions in 2014. The proportion of facilities sold by age largely depends on the product up for sale that year, but even in 2013, 81% of the sales involved a facility that was built before 1993. That is still a significant percentage, but is not that surprising in the industry. There hasn’t been much new construction of skilled nursing facilities (leaving openings for developers like Mainstreet and Innovative Health). However, average prices reached unprecedented levels despite the older facilities, which may mean that as the market demand increases for facilities with either a... Read More »Schedule a demo
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