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 »Valuations soar for “A” quality IL properties
The higher valuations in 2014 (according to the 2015 Senior Care Acquisition Report) should surprise no one. The average price paid per unit for “A” quality independent living communities rose 21.8% from $228,200 in 2013 to $277,900. But, the lesser quality deals didn’t hold back either. In fact, the average price paid per unit for “B” properties rose 55.8% from $99,600 in 2013 to $155,200. This goes to show that in today’s market, just about any piece of property will garner interest from a buyer, as long as it can show potential for profits. Read More »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 »Schedule a demo
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