Senior Housing Unit Prices Skyrocket in Record Breaking M&A Year

As senior housing mergers and acquisitions reach $16 billion, increases in the average price paid per unit are hitting new highs as well.

For the 12 months ending Sept. 30 compared to the previous calendar year, the average price per unit for for assisted living increased 30.5% from $150,600 to $196,600; jumped 28.8% from $164,000 to $211,300 per unit for independent/assisted living and rose 7% from $73,300 to $78,400 per bed for skilled nursing, according to a supplemental quarterly report for The 2014 Senior Care Acquisition Report, which is published by Irving Levin Associates.

Driving the increase in skilled nursing prices was the growing number of over $100,000 per bed skilled nursing facility (SNF) acquisitions the past two years, which has gone from just five in 2012 to 12 in 2013, and 11 so far in the first three quarters of 2014, data show.

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“Buyers are positioning themselves for the changing post-acute care market by purchasing those skilled nursing facilities with the most potential to increase their subacute census and drive managed care business,” said Stephen M. Monroe, editor of the report. “The market for high-quality senior living properties today is stronger than what it was at the peak of the last bull market in 2006-07.”

In addition, capitalization rates have also dropped for each segment of the senior care M&A market since 2013.

For the four quarters ended Sept. 30, assisted living cap rates were down 70 basis points from 8.7% to 8%; down 60 basis points from 8.5% to 7.9% for independent/assisted living; and down 70 basis points from 13% to 12.3% for skilled nursing.

“The availability of equity and cheap debt, plus an influx of new buyers, has been driving prices up and cap rates down in a seniors housing bull market that is seeing more M&A transactions than ever before,” Irvin Levin Associates says.  

Access the report here.

Written by Cassandra Dowell

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