THE TIME TO ACT IS NOW: The acquisition market is hot as existing providers stay competitive by adding to their portfolio. Bigger rather than smaller is producing lower costs, higher quality care, and attractive bottom line for aggressive providers in all types of Senior Facilities: Assisted Living, Memory care, Independent Living, Post Acute Care and Continuing Care Residential Communities.
Low interest rates and cap rates trending downward prompt established providers as well as new players entering the space to compete for the purchase of facilities on the market or future development. According to statistics, senior housing is the No. 1 asset across all commercial real estate based on returns. Consequently if a facility which is on the market was purchased at a 12% return, a new operator could be interested in buying it at an 8% return because the perception of risk is diminishing.
As Senior Housing mergers and acquisitions reach over a reported 16 billion, increases in the average price paid per unit is hitting new highs. Data shows for the 12 months ending September 30, 2014 compared to the previous year the average price per unit for assisted living increased 30.5% from $150,600 to $196,000, jumped 28.8% from $164,000 to $211,300 per unit for independent living/assisted living, and 7% from $73.300 to $78,400 per bed for skilled nursing. Driving the increase in skilled nursing prices was the growing number of over $100,000 per bed skilled nursing facility acquisitions in the past two years.
Buyers are positioning themselves for the changing post-acute care market by purchasing those skilled nursing facilities with the most potential to increase their sub acute census and managed care business according to a report by Stephen Monroe.
The Market for high-quality senior living properties today is stronger than it was at the peak of the last bull market in 2006-2007. The availability of equity and cheap debt, plus an influx of new buyers continues to drive prices up and cap rates down in a senior housing bull market that is seeing more mergers and acquisition transactions than ever before according to Irvin Levin Associates.
THE PRUDENT, DEMAND DRIVEN HEALTHCARE PROVIDER is an active player in today’s Healthcare Industry which is providing an attractive bottom line as well as a quantum leap in qualitative care for the senior population.
By: Shep Roylance