February 15, 2017

2016 senior housing/care M&A deals reach record highs

Investors continued to show optimism in the senior housing and care market last year, with average acquisition prices rising in the three senior-care sectors, including a record average purchase price of $99,200 per bed in skilled-nursing facilities, according to a new report.

The skilled nursing acquisition price per bed was 15 percent higher than 2015, according to data from Norwalk-based Irving Levin Associates.

"The big surprise … was the significant increase in the average skilled nursing facility price per bed when labor costs are expected to rise and reimbursement is expected to tighten," said Stephen M. Monroe, editor of "The Senior Care Acquisition Report," which was produced by Irving Levin Associates. "Investors are betting on the sector and continue to believe that demographics will support strong valuations in the long run, even if interest rates rise."

In addition, the average assisted living price per unit reached $193,650 in 2016, 2 percent higher than the previous record set in 2015 and the average price per unit in the independent-living community acquisition market rose 18 percent over 2015 to $228,150 per unit, which was still below the 2014 record of $246,775 per unit.

There were 337 publicly announced acquisitions in the seniors housing and care acquisition market last year, 6 percent fewer than 2015, which was a record year, but the dollar value of the acquisitions totaled approximately $14.4 billion, or about 1 percent more than in 2015, the report said.

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