for sale sign

Even in today’s economy, buyers are bullish when it comes to investing in skilled nursing facilities, Jason Stroiman, president and founder of Chicago-based Evans Senior Investments, said Wednesday in a webinar.

At 8.5%, the inflation rate is higher than it’s been in almost 40 years, and the Fed is talking about increasing interest rates. Nevertheless, despite the pandemic, economic factors and government regulations, Stroiman said that some marketing tailwinds have remained consistent for many years.

“We’re as busy as we’ve ever been in 20 years. There’s so much activity out there, and so many new buyers that are coming into the marketplace,” he said.

Acquisition values are on an upward trajectory. ESI has valued more than 600 skilled nursing facilities since 2019, and internal data show an increase of $17,000 in price per bed values between 2020 and 2022, Stroiman said. In some states, he added, buyers are paying more than $200,000 a bed.

Market pricing remains bullish despite reduced occupancy, Stroiman said.

“Buyers are paying our sellers as if the building is stabilized. …We have numerous clients that have decided to sell in this market because they can get the same number they would get if they waited to do all the hard work and turn around their own facilities,” he said.

“A trend in recent years, Stroiman added, is that “lenders are closing our transactions at very high loan-to-values, allowing regional operators to acquire skilled nursing facilities for, candidly, very little cash,” he said.

The most bullish buyers are fairly new to the skilled nursing industry, and they typically own 10 to 40 facilities, Stroiman said, adding that the practice makes it difficult for independent operators.