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 »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 »Schedule a demo
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