The average senior housing and care capitalization rate across all segments increased by 74 basis points between April and October, according to results of the 13th edition of CBRE’s US Senior Housing & Care Investor Survey for the second half of 2023. An April survey had found that cap rates had increased for all sectors but skilled nursing.
The commercial real estate services and investment company sought feedback from senior housing investors, developers, lenders and brokers throughout the United States. The survey was conducted in October, and results were released in December.
Seventy-five percent of survey respondents reported cap rate increases of 50, 75 or 100 basis points across all senior living and care categories during the six-month period. Thirty-one percent of the respondents noted increases of 100 basis points or more.
Skilled nursing cap rates increased by 71 basis points between April and October after falling by 34 basis points between CBRE’s previous two surveys. Aron Will, vice chairman of capital markets at CBRE, told the McKnight’s Business Daily that the turnaround in skilled nursing is likely due to Medicaid rate increases in certain states. For example, he said, Ohio increased Resource Utilization Groups (RUG) rates by approximately 50% on Jan. 1
Cap rates among independent living, assisted living and memory care communities increased by 73 basis points, on average, since the previous report. Increases were greater for Class C assets compared with Class A assets, CBRE said, noting that the finding was a reversal from the April survey, which found the biggest increases in Class A assets and core markets.
The average cap rate for active adult communities increased by 68 basis points between April and October.
For additional coverage of the survey results, including predictions about rent increases, see McKnight’s Senior Living.
The full report is available here.
