Record Prices Set for Retirement Housing but Nursing Home Prices Declined in 1997 According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Phone: (800) 248-1668
Fax: (203) 846-8300
pressreleases@levinassociates.com
Record Prices Set for Retirement Housing but Nursing Home Prices Declined in 1997 According to Irving Levin Associates, Inc.
(April 3, 1998 – New Canaan, Connecticut) According to a new report published by Irving Levin Associates, Inc., The Senior Care Acquisition Report, Third Edition, 1998, the prices paid for retirement housing units hit another record in 1997. The average price for assisted living and independent living communities combined rose 12% to $73,900 per unit.
"For the fourth year in a row we have seen a rise in the average price paid for retirement housing," said Stephen M. Monroe, a partner at Irving Levin Associates and the editor of the report. "The abundant supply of capital and the lowest interest rates in 20 years have fueled an acquisition spree for this sector of the senior care market. Assisted living continues to be leading the way."
Five-Year Price History of Retirement Housing

Within the retirement housing sector, independent living communities rose to a record $80,000 per unit in 1997, as many high-end properties came on the market during the year. Assisted living facilities, after posting a slight decline in prices in 1996, also set a new record in 1997 as the average price reached $69,800 per unit. "Although there is more building activity than buying, the dearth of high quality facilities available for sale has caused the prices to be bid up to these record levels," according to Mr. Monroe.
The nursing home sector, however, witnessed its first decline in eight years in the average price paid per bed. After hitting record levels in 1996, the average price paid in 1997 dropped 4.3% to $40,500 per bed. "Given the run-up in prices over the past several years, a small decline was to be expected at some point in time," stated Mr. Monroe. "We thought the nursing home acquisition market had gotten a little frothy by the end of 1996, but demand is still quite strong for quality nursing facilities and buyers will pay up for them." Almost 25% of the nursing home sales were at prices above $50,000 per bed, and one facility sold for more than $100,000 per bed – a new high.
Five-Year Price History of Nursing Homes

The continued trend of consolidation in the senior care market is part of the overall consolidation trend nationally in health care. In 1997, there were more than 1,200 publicly announced mergers and acquisitions in the health care services sector, a 20% increase over 1996, which itself was a record. "Although the consolidation trend in health care slowed down towards the end of 1997, it has picked up steam again and we expect similar levels of activity in 1998," stated Mr. Monroe.
The Senior Care Acquisition Report, Third Edition, 1998 contains statistics on the nursing home and retirement housing acquisition market, including price per bed, capitalization rates, income multipliers and regional statistics. It also includes transaction information on each of the publicly announced senior care acquisitions in 1997.
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based research and publishing firm specializing in the seniors housing and health care merger and acquisition market. Founded in 1948, the Firm has 50 years of experience in the health care acquisition market. To keep abreast of this rapidly evolving market and obtain valuable information and statistics to assist you in your business and investment decisions, you may order a copy of The Senior Care Acquisition Report, Third Edition, 1998 by calling (800) 248-1668.
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