Assisted Living and Skilled Nursing Facility Prices Jump To New Record

FOR IMMEDIATE RELEASE Stephen M. Monroe
Partner
800-248-1668
203-846-6800
Fax: 203-846-8300
pressreleases@levinassociates.com

NORWALK, CT – March 9, 2015 – A combination of growing investment demand, abundant capital and low interest rates resulted in many records set in the seniors housing and care acquisition market in 2014. The average price per unit in the assisted living market jumped by 25% in 2014 to a record $188,700 per unit, while the average price per unit for independent living communities also set a new record of $246,800 per unit, or more than 28% higher than in 2013. The skilled nursing market set a record for the second year in a row, reaching $76,500 per bed, or 4% higher than in 2013, according to a soon-to-be-published study from Irving Levin Associates, The Senior Care Acquisition Report, Twentieth Edition, 2015. “We had been tracking the acquisition market all year, and while we knew some records were going to be set, we were still surprised that record average prices were set across the seniors housing and care spectrum,” stated Stephen M. Monroe, Editor of the Report. “Investment demand has been very strong, and as prices go up, more owners are enticed to put their properties on the market to take advantage of this peak demand for seniors housing and care properties” Monroe continued.

Average assisted living cap rates dropped to a record low of 7.75% while average independent living cap rates also hit a low of 7.4%. In the skilled nursing market, while the average cap rate fell 60 basis points to 12.4%, it did not set a record, which was last set in 2007. “The combination of lower cap rates, plus the higher cash flow per unit and bed sold, all contributed to the record-setting average prices in 2014,” commented Monroe.        

Other records were set in 2014 as well. There were a total of 294 publicly announced mergers and acquisitions across the seniors housing and care spectrum in 2014, representing a 26% increase over the transaction volume in 2013, which itself had been a record year. In addition, the dollar value of these transactions set a record of approximately $25.5 billion, or more than double the dollar value in 2013. “The breadth of demand was extremely wide in the seniors housing and care market, which resulted in a record number of deals and dollars spent in the market in 2014. We do not see that changing in 2015 as long as interest rates remain reasonably low,” stated Monroe. “Public and private REITs, private equity firms, pension funds and foreign investors, not to mention the operating companies seeking to grow, all contributed to this record-setting year,” Monroe continued. With prices so high, there has been some concern that we are approaching a bubble in valuations, especially as seniors housing development continues to expand. But for now, acquisition demand continues to be strong.   
                  
The Senior Care Acquisition Report, Twentieth Edition, 2015 contains statistics on the skilled nursing facility, assisted living and retirement housing merger and acquisition market, including prices per bed or unit, capitalization rates and income multiples, in more than 250 pages.  The report also includes transaction information on each of the 294 publicly announced seniors housing and care acquisitions in 2014 (a new record), plus the publicly announced home health care and hospice acquisitions in 2014. The Senior Care Acquisition Report, Twentieth Edition, 2015 may be purchased for $595. For more information, or to order the report, call 800-248-1668.  Irving Levin Associates, Inc. was established in 1948 and has headquarters in Norwalk, Connecticut. The company publishes research reports and newsletters, and maintains databases on the health care and senior housing M&A markets.

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