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 »Seniors housing prices by quartile
An owner of a new, well-occupied, profitable seniors housing property may look at the average price paid per unit of $208,200 for assisted and independent living communities in 2014 (according to the 2015 Senior Care Acquisition Report) and think it has no meaning to them and their above-average property. They may have a point, so we broke down the market by quartile and separated out the higher end of the market from the lower. Given the higher valuations and number of high-quality properties coming on the market, it should surprise no one that the upper quartile hit a new record with a price of $250,800 per unit (meaning that 25% of the properties sold in 2014 went for prices above this... Read More »The impact of rising acuity in skilled nursing
The rise in acuity in post-acute care is certainly having its impact in the skilled nursing M&A market. Historically, the range in price per bed for skilled nursing facilities has been approximately $100,00 to $125,000 per bed, according to the 2015 Senior Care Acquisition Report. Every year, there are always sales between $10,000 and $20,000 per bed, with the occasional sale below $10,000 per bed. And there have always been sales above $100,000. But in 2014, while the low price was a typical $9,000 per bed, the high was an astounding $268,500 per bed, resulting in a spread of $259,500. There was also a record number of deals valued over $100,000 per bed, with 19 transactions, which... Read More »What’s the premium for a stabilized facility?
With the general rise in the average price per bed, both stabilized (which we define as having an occupancy rate at or above 85%) and non-stabilized skilled nursing facilities saw an increase in their average price per bed. But as with assisted living, it was the non-stabilized group that posted the larger increase, with a 27% in the average price per bed, compared to just a 6% increase for stabilized properties. Non-stabilized facilities on average sold for $63,900 per bed in 2014, while stabilized facilities sold for $94,100 per bed, with the overall average coming out to $76,500 per bed. The faster rise in prices for these struggling facilities shows that buyers in today’s market may... Read More »High prices for struggling AL communities
You know we are in a strong seller’s market when even the non-stabilized properties are worth on average 68% more in 2014 than in 2013. After hovering around $85,000 per unit in 2012 and 2013, the average price paid for non-stabilized assisted living communities (which we define as having an occupancy lower than 85%) in 2014 was about $139,000 per unit, showing that buyers are worrying less about the potential of filling empty rooms. Maybe all this talk about demographics has convinced many buyers that seniors will be knocking on their door in just a matter of time. Read More »Schedule a demo
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