Assisted Living and Skilled Nursing Facility Prices Jump to New Record

A combination of growing investment demand, abundant capital and low interest rates resulted in many records set in the seniors housing and care acquisition market in 2014.

The average price per unit in the assisted living market jumped by 25% in 2014 to a record $188,700 per unit, while the average price per unit for independent living communities also set a new record of $246,800 per unit, or more than 28% higher than in 2013. The skilled nursing market set a record for the second year in a row, reaching $76,500 per bed, or 4% higher than in 2013, according to a soon-to-be-published study from Irving Levin Associates, The Senior Care Acquisition Report, Twentieth Edition, 2015.

“We had been tracking the acquisition market all year, and while we knew some records were going to be set, we were still surprised that record average prices were set across the seniors housing and care spectrum,” said Stephen M. Monroe, editor of the report. “Investment demand has been very strong, and as prices go up, more owners are enticed to put their properties on the market to take advantage of this peak demand for seniors housing and care properties.”

Other records were set in 2014 as well. There were a total of 294 publicly announced mergers and acquisitions across the seniors housing and care spectrum in 2014, representing a 26% increase over the transaction volume in 2013, which itself had been a record year. In addition, the dollar value of these transactions set a record of approximately $25.5 billion, or more than double the dollar value in 2013.

“The breadth of demand was extremely wide in the seniors housing and care market, which resulted in a record number of deals and dollars spent in the market in 2014,” Monroe continued. “We do not see that changing in 2015 as long as interest rates remain reasonably low. Public and private REITs, private equity firms, pension funds and foreign investors, not to mention the operating companies seeking to grow, all contributed to this record-setting year.”