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 »Show me the money
There is probably no better measure of a seniors housing property’s quality than how much it pulls in per unit. When it comes down to it, amenities are nice, modern features are important, but cash is king. As acuity is rising in the seniors housing market, communities are taking in more cash per unit (even if the margin may be declining). And a newer, high-quality property can obviously charge more in rent than a 40-year old property. Both of these factors led to a significant rise in the average NOI per unit in 2014 (according to the Senior Care Acquisition Report), going from $12,000 in 2013 to $14,300 per unit in 2014 for assisted/independent living, a 19% increase. That is also higher... Read More »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 »Schedule a demo
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