The average price per unit in assisted living increased by 14% to set a record of $221,250 per unit in 2017, according to new acquisition data from Irving Levin Associates.
The average cap rate for assisted living communities declined to 7.6%, which contributed to the higher values, the company said.
“The market was definitely dominated by higher-quality properties sold in 2017 as well as an abundance of private equity firms flush with new cash to invest,” said Stephen Monroe of Irving Levin Associates and editor of “The Senior Care Acquisition Report, 23rd Edition.” “The combination of excess liquidity and a relatively low cost of debt has fueled the pricing to new records,” he added.
|NIC’s Actual Rates Initiative
DALLAS — An initiative to capture the room and care rates actually paid by seniors housing residents was highlighted Wednesday as the National Investment Center for Seniors Housing & Care kicked off its Spring Investment Forum.
NIC executives talked about the organization’s collaboration with Eldermark, which has built standardized reporting into its system so that clients easily participate in NIC’s Actual Rates initiative if they wish to do so. Data collected from operators are de-identified and used in NIC MAP’s aggregate reporting of industry trends in an effort to move the seniors housing industry toward a level of transparency comparable to that of other real estate property types.
“NIC has been tracking market rate data for the last 12 years,” NIC President and CEO Brian Jurutka said at a press conference. “However, in order to provide that transparency and comparability of real estate asset classes, there’s this understanding that we need to start getting the actual rates paid per unit. In order to do so, we’ve been spending a lot of time working with operators directly. However, one of the opportunities we have to help scale it up is to work with some of the large software providers in the space.”
Eldermark CEO Craig Patnode said he looks forward to more Eldermark clients participating in the Actual Rates Initiative, and he also encouraged other software providers to participate.
“We’re happy to take the lead, because we are a leadership type of organization,” he said. “We would encourage other software companies to take the same pathway to help share data as needed.”
Eldermark’s alliance with NIC originally was announced in September 2016.
The market for communities that have mostly independent living units also increased in value, but not to the record level that had been achieved in 2014, Irving Levin said. The average price per unit for such communities increased by 1% in 2017, to $230,100 per unit.
Irving Levin also found that the average price per bed for skilled nursing facilities dropped by 18% to $81,350 in 2017, affected by cuts in Medicare Advantage reimbursement and lengths of stay, increasing labor costs and declines in occupancy.