Rising Valuation Metrics in Seniors HousingThe seniors housing industry is booming, causing investors, buyers, and sellers to study valuation metrics more closely. Numbers are continuing to grow rapidly. Regardless of which senior living investment you’re interested in, two metrics will be necessary in determining value. Seniors housing valuations include a price per bed value and a price per unit value, as well as the all-important income approach using a cap rate.

The Numbers Prove that the Seniors Housing Sector is Growing

The price per unit value applies to independent living facilities, assisted living facilities, and memory care facilities.

Recently, assisted living and independent living facilities have experienced extreme increases in their valuations. Even distressed assets that cannot create enough cash flow to derive an income-approach valuation are selling for higher valuations. Several years ago, facilities were being sold for $45,000 to $55,000 per unit. Now, they are trading for up to $100,000 per unit or more.

For senior living properties that perform well financially, this is great news. This is especially positive for assisted living facilities. In California, over forty-year-old facilities with cash flow to support it are trading way over $250,000 per unit. These prices are often similar to the cost of new construction. Assisted living facilities that are newer and under 15 years old with high cash flows even exceed $500,000 per unit. New players and veterans are both eager to sell their assisted living properties.

Those who are preparing to purchase skilled nursing facilities for sale should be aware of the price per bed valuation, which is the type of metric used by skilled nursing properties. Like independent and assisted, SNFs are also experiencing the drastic increase in pricing, shattering the ceiling on prices previously set in stone by investors and operators.

In the past, most U.S. skilled nursing markets did not exceed $100,000 per bed, no matter the cash flow. This is no longer the case. Today, skilled nursing facilities for sale trade well above this number. For example, Sabra Health Care REIT, Inc in Irvine purchased four skilled nursing facilities for sale in Maryland. The purchase involved 678 beds at a $234 million valuation, which calculates to an unmatched $345,000 per bed.

For distressed assets, the price per bed valuation is also increasing. Historically, these assets would sell for $30,000 to $40,000 per bed. Now in states like California with large barriers to entry for new construction, they are being sold for $60,000 to $70,000 per bed.

The Stahler Group is Your Investment Specialist

When the seniors housing industry has new buyers and sellers with these spectacular seniors housing valuations, it is essential to have the right guidance in choosing your seniors housing for sale or other assisted living investment.

The Stahler Group is one of the most experienced healthcare brokerages that specializes in senior living investments, assisted living investments, nursing home investments, and helping clients design the best deal for their goals.

Contact one of our experienced agents today for a free business valuation or any other complimentary information on how The Stahler Group can help you with your seniors housing investment.