What’s the price for quality?
For the past few years, we have separated out the “A” properties from the “B” properties in our statistics based on a few factors (age, size and location). Not surprisingly, the average price paid for “A” assisted living properties was higher than “B” assisted living properties ($244,800 per unit versus $102,300 per unit) by a difference of $142,500. To put it in perspective, the spread in 2013 was only $87,500 ($222,400 per unit for “A” versus $134,900 per unit for “B”). But what was especially interesting was that “A” properties made up about half of the sales in 2014, compared to 2013 when “B” properties were sold three times more often than “A’s”. This means that there were... Read More »Average IL cap rate falls 80 basis points
The average cap rate largely depends on the properties that sold. Even in a year when valuations rise and cost of capital remains low, cap rates may actually rise because the communities sold were of lesser quality. That factor has played a key role in determining the average cap rate for independent living communities in the last two years. In 2013, there were more low-quality, small properties that sold, which drove the average cap rate for the year up 20 basis points to 8.2%. However, there were more quality independent living communities sold in 2014, which helped decrease the average cap rate by 80 basis points to 7.4%. What most likely happened is that owners of these prime... Read More »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 »Schedule a demo
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