Assisted Living Price-Per-Unit Hit Record High in 2017

The average price per assisted living unit in the U.S. has hit a new high-water mark despite some industry pressures.

Average price per unit paid grew by 14% to a new record of $221,250t, according to the latest Senior Care Acquisition Report from market intelligence firm Irving Levin Associates. The average cap rate for assisted living communities fell to 7.6%, helping to push values higher.

Units at independent living communities also increased in value, though not to record-setting levels. The average price per unit for independent living communities increased 1% in 2017, to $230,100 per unit. Addiitonally, the average independent living cap rate fell to 7.0%.

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There is growing evidence that offering independent living or assisted living on a standalone basis is falling out of favor with investors and operators. In a recent survey from professional services firm JLL (NYSE: JLL) a whopping 86% of respondents said communities that had both independent and assisted living options were “very or extremely desirable.”

“Most independent living communities now have assisted living units, so the market difference is beginning to blur,” Irving Levin noted in an announcement about the new report. “Demand remains strong for high-end communities, but not many come on the market for sale.”

The number of publicly announced transactions dropped to 302 in 2017, which is a decline from 338 in 2016, according to the report. Sector headwinds, such as ongoing oversupply concerns and tightening labor markets, might be to blame for the dip.

However, the dollar value of those transactions grew from $14.5 billion in 2016 to $15.9 billion in 2017. The National Investment Center for Seniors Housing & Care (NIC) pegged 2017’s transaction dollar volume at $16.6 billion in January.

Written by Tim Regan

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