RECORD PRICES PAID FOR ASSISTED LIVING FACILITIES IN 1998 AND NEAR-RECORD PRICES FOR NURSING HOMES According to Irving Levin Associates, Inc.

FOR IMMEDIATE RELEASE
Stephen M. Monroe, Partner
Sanford B. Steever, Editor
Phone: (800) 248-1668
Fax: (203) 846-8300
pressreleases@levinassociates.com
RECORD PRICES PAID FOR ASSISTED LIVING FACILITIES IN 1998 AND NEAR-RECORD PRICES FOR NURSING HOMES According to Irving Levin Associates, Inc.
(New Canaan, Connecticut – February 26, 1999) –According to a new report to be published by Irving Levin Associates, Inc., The Senior Care Acquisition Report, Fourth Edition, 1999, the average price paid for assisted living facilities hit record levels for the second year in a row. Separately, after a 4% decline in 1997 from the record set in 1996, the prices paid per bed for nursing homes rose slightly in 1998.
“Despite the turmoil in the credit and stock markets for the senior care industry in 1998, there was no shortage of buyers willing to pay top dollar for the properties they wanted,” according to Stephen M. Monroe, a partner at Irving Levin Associates and the editor of the Report. Assisted living per unit prices increased almost 10% over 1997’s record level to $76,300 per unit. “The increase in prices paid is indicative of what the market will pay for newer, higher quality properties,” continued Mr. Monroe.
Assisted Living Facilities
Average Price Paid Per Unit
1998
$76,300
1997
$69,800
1996
$56,200
1995
$59,600
1994
$43,500
For three years in a row, the average price paid for nursing homes has been over $40,000 per bed. “With all of the concerns about the new Prospective Payment System (PPS) for Medicare reimbursement, combined with lower occupancy rates and increased competition from assisted living facilities, we expected per bed prices to continue their decline after 1997’s drop. Instead, they rose by almost 2%,” according to Mr. Monroe. The average price paid in 1998 was $41,300 per bed, compared to $40,500 per bed the previous year.
“Even though many of the large, publicly traded nursing home companies have withdrawn from the acquisition market because of their low stock prices and declining profitability, there are many other buyers in the market that want to make strategic acquisitions. These include private investors and small to medium size, privately owned chains,” stated Mr. Monroe. “One reason prices have remained relatively high is that there is very little new construction of nursing homes, since most states have tight restrictions on their supply.”
Nursing Homes
Average Price Per Bed
1998
$41,300
1997
$40,500
1996
$42,300
1995
$39,000
1994
$32,300
In 1998, there was a record number of senior care mergers and acquisitions, and the dollar value of these transactions exceeded $8.8 billion. The continuing trend of consolidation in the senior care market is part of the overall consolidation trend nationally in health care. In 1998, there were more than 1,100 publicly announced mergers and acquisitions in the health care services sector, which represents the second highest level ever.
The Senior Care Acquisition Report, Fourth Edition, 1999, contains statistics on the assisted living, retirement housing and nursing home merger and acquisition market, including prices per bed or unit, capitalization rates, income multipliers and regional statistics. It also includes transaction information on each of the publicly announced senior care acquisitions in 1998.
Irving Levin Associates, Inc. is a New Canaan, Connecticut-based research and publishing firm specializing in senior housing and health care investments. The Firm has over 50 years of experience in the health care acquisition market. The Senior Care Acquisition Report, Fourth Edition, 1999, may be purchased by calling (800) 248-1668.
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