Capitalization rates have decreased significantly for each segment of the senior care M&A market since 2013, according to recent data in The 2014 Senior Care Acquisition Report, published by Irving Levin Associates.
Bull market: For the four quarters ended Sept. 30, 2014, assisted living cap rates were down 70 basis points, from 8.7% to 8.0%. They were down 60 basis points, from 8.5% to 7.9%, for independent/assisted living. Also, they were down 70 basis points, from 13.0% to 12.3%, for skilled nursing.
“The availability of equity and cheap debt, plus an influx of new buyers, has been driving prices up and cap rates down in a seniors housing bull market that is seeing more M&A transactions than ever before,” says the report. The average price per unit for assisted living facilities is up 30.5%, from $150,600 to $196,600; 28.8%, from $164,000 to $211,300 per unit, for independent/assisted living; and 7.0%, from $73,300 to $78,400 per bed, for skilled nursing.
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