Age before beauty
There was a complete flip-flop in the percentage of skilled nursing facilities sold by age, with the oldest category (greater than 40 years old) increasing to 52% of the properties sold in 2015, compared with just 22% in 2014 (according to the 21st Senior Care Acquisition Report, released last month). Several of these properties, however, sold for more than $100,000 per bed, indicating their location or profitability overcame the issue of their old age. But, if we saw a massive increase in the number of sales of 40-year old SNFs (or older), then what drove the market to its all-time record high average price of $85,900 per bed? It was an increase in the number of facilities sold that were... Read More »The Growing Memory Care Market
Memory care is a growing need, and it has been the focus of a lot of new development. But it can be risky as well. Last week I talked about the first quarter occupancy and new construction stats, but today let’s focus on memory care. This has been an area of heightened investment interest because there are fewer memory care units in the market then AL and IL and, unfortunately, the need for memory care will only increase, and may increase at a faster pace than traditional assisted living. Some providers are even seeing an increase in the “young” population with memory care or other dementia-related issues, and I am talking about under 70 years old and not just retired NFL players. It is a... Read More »
The thaw in Canada
The Canadian senior care M&A market seems to have thawed this Spring, with a hefty acquisition. Sienna Senior Living paid CAD$255 million ($201.7 million) acquisition of eight retirement/senior care communities in British Columbia. Known as the Baltic properties (though certainly not a Monopoly reference due to their quality), the portfolio includes two private pay independent living communities and six senior care communities that include both long-term care and assisted living. Plus, Sienna purchased a 50% interest in Pacific Seniors Management General Partnership, the current manager of the Baltic properties, as well as options to acquire up to 100% of two newly built seniors... Read More »
Welltower in NYC?
Welltower, in partnership with real estate investment firm (and newbie to seniors housing), Hines, has acquired a site to develop an assisted living/memory care community in Midtown Manhattan. The original owners of the two adjacent properties that make up the one site brought in Eastern Consolidated to represent them in the sale, for which the terms were not disclosed. Design and development plans have been started, but no scheduled start date has been announced. So, it looks like Omega Healthcare Investors and Maplewood Senior Living will have some competition for their Manhattan senior living development, which is located on the Upper East Side and comprises 20 stories of 214... Read More »
Regional seniors housing prices stick with tradition
Last week, we wrote of a big shake-up in the regional average prices per bed for skilled nursing facilities, with the North Central region supplanting the Western and Northeast regions for the top spot, in terms of average price paid according to the recently published 21st Senior Care Acquisition Report. The seniors housing (including independent and assisted living) side, however, largely followed tradition. Once again, the Northeast region topped the charts (for the sixth year in a row) with an average price per unit of $201,100, despite it dropping 29% from the previous year’s average if $281,700 per unit. That is not surprising given the region’s high land values and construction... Read More »
Senior living hits the slopes
Three years after opening on a piece of land that was a former ski slope in North Andover, Massachusetts, a 133-unit senior living community is refinancing its debt with the help of Richard Thomas of Grandbridge Real Estate Capital. Built by Shelter Development at a cost of approximately $20 million, the community is operated by Brightview Senior Living and features 65 independent living units, 41 supportive living units and 27 memory care units. It is located on 33 acres, of which 25 have remained open space and the original ski slopes have been preserved. Mr. Thomas originated a $30.25 million floating-rate first mortgage loan through Fannie Mae’s DUS Structured Adjustable Rate Mortgage... Read More »
Flashback Friday
Twenty years ago, a well-operating 59-bed skilled nursing facility sold for $2.25 million, or about $41,000 per bed. With an occupancy of 95%, a 42% private pay census and a 15% operating margin, things were looking up for the 25-year old facility. However, in recent years, operations began to suffer with low occupancy and negative-to-breakeven cash flow as recent as early 2014. But the most recent owner/operator turned it around, stabilizing occupancy to around 90% and improving cash flow. Quality mix is currently in the mid-teens. Now, a regional owner/operator based in southeast Florida looking to expand its presence on Florida’s west coast is purchasing the facility, paying $4.9... Read More »
Where to buy (or sell) SNFs
Traditionally, the Northeast and West regions have commanded the highest average prices per bed for skilled nursing facilities because of their high real estate values and generally higher daily rates. However, the North Central region surprised us with the highest average price per bed, up from $68,400 per bed in 2014 to $100,200 per bed in 2015. This was largely driven by a few high-priced portfolio sales as well as newly built properties that always command high prices, no matter their zip code. Next came the Northeast, which increased from $88,200 per bed in 2014 to $94,100 per bed in 2015. As for the three remaining regions, there was a sharp drop-off, most significantly for the West... Read More »Occupancy, Rates And Discounting In Seniors Housing
The recent NIC MAP data on occupancy, development and rate growth can be interpreted in many ways. So, what are we really to make of the NIC MAP data for the first quarter? Most of the data was viewed positively, despite a smallish decline in occupancy from last year’s fourth quarter. Absorption levels have been increasing, according to the data, and construction starts as a percent of existing supply declined from both the fourth quarter and the year-ago quarter. Does this mean that the much-feared over-building threat has dissipated? Hardly, as one quarter’s worth of data does not present a strong trend, and it is possible the small decline in starts was related to the chaos in the... Read More »
Exit the extremes
While the average price per bed for skilled nursing facilities hit a record high in 2015 (at $85,900 per bed), driven largely by a record number of transactions valued above $100,000 per bed, seniors housing (assisted and independent living combined) experienced a drop in its average price per unit. After 2014 set a record with an average of $208,200 paid per unit, the average in 2015 dropped to $189,900 per unit. What drove this decrease? Well, there were fewer high-priced sales, proportionally, in 2015. The upper quartile in 2015 was $227,900 per unit, meaning that 25% of the properties sold at prices above this level. That is well off from 2014’s record-high of $250,800 per unit.... Read More »Schedule a demo
Gain access to the best healthcare and long-term care investment intelligence, data, and analysis.
