Average skilled nursing facility cap rate falls
A couple of weeks ago, we discussed the fall in the average skilled nursing facility cap rate by 60 basis points to 12.4% (according to the 2015 Senior Care Acquisition Report, just recently published). For assisted living, we saw an even larger fall of roughly 90 basis points to 7.75%. The downward trend is not surprising, as AL cap rates have steadily declined since the Great Recession, but the extent of the fall was. In this market of higher and higher valuations plus abundant (and cheap) capital, buyers are looking to pay more for quality assisted living communities, even if that means pricing out operating risk somewhat, because margins aren’t changing all that much, at least not that... Read More »Why do skilled nursing values continue to soar?
In the last year, we have seen more skilled nursing deals valued above $100,000 per bed than ever before. That number of deals in turn drove up the average price per bed for SNF deals to a record high in 2014, to $76,500 per bed. But what was it about these facilities that drove up their valuations to new heights? For one, they were newer. Facilities built in the past 20 years sold for an average price of $111,900 per bed, compared to facilities built between 20 and 40 years ago ($72,400 per bed) and 40 years and older ($75,700), according to the just-published 2015 Senior Care Acquisition Report. We will see how SNFs evolve over time, and what will happen to those 1960s and 1970s... Read More »Occupancy Increases in 4th Quarter
Assisted living and independent living occupancy rates continue to increase. It’s always nice to start the New Year with a little good news, and the good news I am talking about is the sequential and year-over-year increases in occupancy rates across seniors housing. The NIC MAP data has shown the largest increases to be in independent living, which makes sense since there are fewer new units coming on stream. The odd thing from the data is that occupancy levels in the primary 31 markets averages about 40 to 50 basis points lower than the other 68 markets covered by NIC MAP. A similar phenomenon exists with construction starts as a percentage of supply. In the top 31 markets, trailing... Read More »Memory Care slowing down?
Have we begun to see a slowdown in the interest in building memory care? The last few weeks, we have been hearing some rumblings of developers beginning to be even more cautious, if not dismissive, of constructing stand-alone memory care centers or memory care units within assisted living in certain markets. Last week, we wrote of an assisted living community undergoing a $4.5 million expansion, in which the developer planned to nearly double its assisted living capacity, while taking away one memory care unit. What influenced this decision was the number of AL inquiries the developers received, and the fact that the Cleveland, Ohio market already had plenty of new memory care communities,... Read More »Schedule a demo
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