As prices fall, IL cap rates stay
The average price per unit for independent living had the most dramatic change of the other acuity classes (a 13% drop from 2014 to the 12-months ending June 30, 2015, compared to a 0.4% increase for assisted living and a 3% drop for skilled nursing in the same time period), so one would expect some move in average cap rate, presumably a move up. But, the average IL cap rate for the 12-months ending June 30 did not budge from its 2014 level of 7.4%. Perhaps the quality of IL transactions hasn’t changed, with owners of high-quality communities still tempted by the high valuations, but there just have not been as many of those ultra-high end sales this year. Read More »Cap Rates And Reality
There appears to be a feeding frenzy on where cap rates should be, and the frenzy is only taking them lower. Did you read about the fully stabilized assisted living community that sold for a 3.5% cap rate on first year numbers? You didn’t? April fools, neither did I. But don’t be surprised if it happens given the way the market is going. Two months ago, while attending a seniors housing conference, we heard a rather matter-of-fact statement that cap rates for “A” properties were in the range of 5.5% to 6.0%, and “B” properties were in the broad 6% range. While our annual statistics do not bear this out, we do know that there are transactions done with cap rates between 5% and 6%, with a... Read More »Schedule a demo
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