Assisted Living and Skilled Nursing Facility Prices Jump To New Record

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NORWALK, CT - February 25, 2016 - After a record-setting year across all senior care sectors in 2014, average skilled nursing facility prices soared again to a new record of $85,900 per bed, or 12% higher than in 2014. In the assisted living market, the average price paid per unit just topped the previous record set in 2014 by less than 1.0%, reaching $189,200 per unit in 2015. The only area in the senior care spectrum that witnessed a decline in average acquisition values was in the independent living community acquisition market, which is much smaller than both assisted living and skilled nursing. But that decline had more to do with an unusual increase in values the prior year based on an increase in higher quality portfolios and properties sold. All of the market statistics will appear in a soon-to-be published study from Irving Levin Associates, The Senior Care Acquisition Report, 21st Edition, 2016.  

A combination of abundant capital, low interest rates and continued investor demand resulted in one of the most active acquisition markets ever seen. In 2015, there were 357 publicly announced acquisitions in the senior care property market, representing an 18% increase over 2014, which was a record year itself. Despite this large increase in transactions, the dollar value of the 357 acquisitions totaled just $14.2 billion, or 44% lower than in 2014. The big difference between the two years, and what was driving the decline in total dollar value, was the near absence of billion-dollar transactions in 2015. There was just one in 2015 for only $1.125 billion compared with five in 2014 totaling approximately $9.7 billion in senior care assets. “We knew some records were going to be broken, but the record number of individual transactions in 2015 demonstrates how strong investor demand continues to be for senior care properties,” stated Stephen M. Monroe, Editor of the Report. “The real surprise was how much the average price for nursing facilities increased in a year when public company stock values fared so poorly,” Monroe continued.

Average skilled nursing cap rates dropped to 12.2%, just 10 basis points above their record low, and assisted living cap rates stayed the same as in 2014 at 7.7%. Average independent living cap rates hit a record low of 6.96% despite the average price per unit dropping in 2015 from the record set in 2014. “The combination of lower cap rates, plus the higher cash flow per unit and bed sold, all contributed to the high average prices in 2015,” commented Monroe.        
The Senior Care Acquisition Report, 21st Edition, 2016 contains statistics on the skilled nursing facility, assisted living and retirement housing merger and acquisition markets in more than 70 charts and graphs, including prices per bed or unit, capitalization rates and income multiples, in more than 300 pages.  The Report also includes transaction information on each of the 357 publicly announced seniors housing and care acquisitions in 2015 (a new record), plus the publicly announced home health care and hospice acquisitions in 2015. The Senior Care Acquisition Report, 21st Edition, 2016 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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