Senior Living Acquisition Prices Neared Record Highs in 2013

| April 9, 2014

Senior living acquisition prices are nearly back to their pre-recession peaks across property types, with skilled nursing seeing the highest per unit prices paid in 2013—up 21% year over year—according to an annual tally published by Irving Levin Associates.

In its 19th year of publication, The 2014 Senior Care Acquisition Report notes that the average price paid for skilled nursing facilities rose to a record high $73,300 per bed in 2013, a 21% increase compared to the prior year’s average price

Additionally, the average SNF price per bed paid in 2013 was 17.3% higher than its previous record, which was set in 2010 when the average pricer per bed was  $62,500.

“While we were surprised by the significant jump in the average skilled nursing facility price per bed, we had been seeing all year a higher number of skilled nursing facilities on the market that catered to a much higher acuity mix, or were in markets that had the potential for higher acuity, and that is what the buyers want,” said the report’s editor, Stephen Monroe, in a statement. 

While average price for SNFs showed considerable growth, average cap rates for these facilities stayed within historical norms at 13%.

The private pay sector—including independent living, assisted living and memory care communities—also reported substantial average price growth. 

For this sector, the average price paid was $164,000 per unit last year, just below the record set in 2007 at $164,500 per unit. 

“Demand was so great in this market that for many of the transactions, there were as many as a dozen bids made,” stated Monroe. “It was truly a seller’s market.”

When breaking down components of the private pay sector, there were discrepancies between average prices per unit growth when looking at communities containing mixes of independent living and assisted living. 

Communities that are mostly independent living set a record price of $191,950 per unit in 2013, which was 38% higher than the average price per unit in 2012. 

In the assisted living market, however, the average price per unit declined 4.5% in 2013 to $150,600. The drag on price growth, Monroe suggests, could be attributed to smaller and older players within the market. 

“Demand remained strong for assisted living and memory care communities, but in 2013 various small and older communities were in the market that nudged the average price down,” he stated. “There were plenty of sales above $200,000 per unit.”

The senior housing M&A market also indicated strong growth in 2013 compared to the previous year, as the number of publicly announced transactions increased by 20% to 225 individual senior housing and care mergers or acquisitions. 

Looking ahead, the report suggests that future M&A activity will continue to grow.

“The market was liquid with the most buyers since the last market peak in 2007, accompanied by a major increase in transactions by the non-traded healthcare REITs,” stated Monroe.

Written by Jason Oliva


Category: Acquisitions, Assisted Living, Independent Living, Senior Care, Senior Housing, Senior Living, Skilled Nursing

Comments (1)

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  1. Ryan Saul says:

    Exciting times in Seniors Housing. Great article. I suspect that we will continue to see a Seller’s market as interest rates remain at historic lows. In addition, skilled nursing communities built in the last decade with a high Medicare and private pay census will continue set records across the country. Institutional capital is aggressively acquiring new, high quality assets. There are very few available and when those do come on the market, there is significant buyer demand.

    Ryan Saul