Stephen M. Monroe, Partner
Phone: (800) 248-1668
Fax: (203) 846-8300
Record Prices Set for Nursing Homes and Retirement Housing in 1996 According to Irving Levin Associates, Inc.
(April 16, 1997 – New Canaan, Connecticut) According to a new report published by Irving Levin Associates, Inc., The Senior Care Acquisition Report, Second Edition, 1997 the prices paid for nursing home beds and retirement housing units hit record levels in 1996. In addition, there were a record 124 publicly announced transactions in the senior care market during the year, or almost double the volume in 1995.
“For the fifth year in a row, we have seen an increase in the average price paid for nursing homes to a record $42,300 per bed,” stated Stephen M. Monroe, a partner at Irving Levin Associates. This new level represents an 8% increase over 1995’s record average price. According to Mr. Monroe, the record prices have “more to do with a changing market than anything else. Most buyers are targeting the higher quality facilities and this is driving the market at this point in time. A few years ago, almost 50% of the market was for nursing homes under $30,000 per bed. Now, the lower end segment represents less than 15% of the acquisition market.”
Five-Year Price History of Nursing Homes
The retirement housing sector also witnessed record average prices paid in 1996. The combined market for assisted and independent living facilities rose to an average price of $66,000 per unit, compared to $54,000 per unit in 1995. According to Mr. Monroe, “This surge was driven by the abundance of capital and the growth demands of the assisted living industry. The price increases in this sector were greatly influenced by assisted living companies competing for the independent living retirement facilities. I think it is safe to say that the market has peaked.”
Within the retirement housing sector, the average price of independent living facilities rose to $70,000 per unit in 1996, compared to $52,000 per unit the prior year. Assisted living average prices declined to $56,000 per unit compared to $59,000 in 1995. “This does not represent a decline in the assisted living market, but merely a reflection of the lack of assisted living product available for sale,” stated Mr. Monroe.
Five-Year Price History of Retirement Housing
The continued trend of consolidation in the senior care market is part of the overall consolidation trend nationally in health care. In 1996, there were nearly 1,000 publicly announced mergers and acquisitions in the health care services sector, an increase of 57% over 1995. “This consolidation in health care on a massive scale is continuing in 1997 with no end in sight,” according to Mr. Monroe. “The same will hold true for the senior care market.”
The Senior Care Acquisition Report, Second Edition, 1997 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 mergers and acquisitions in 1996.
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based financial services firm specializing in health care investments. The Firm has nearly 50 years 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, Second Edition, 1997 by calling (800) 248-1668.
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