Feature

NEW CANAAN, Conn., March 13 - The average sales price for retirement housing facilities increased by 3 percent last year -- a record high, according to a report by Irving Levin Associates Inc., a research and information firm that tracks mergers and acquisitions in the health care market.

The average sales price paid for assisted living facilities in 1999 was $79,000 per unit, according to Levin's report, The "Senior Care Acquisition Report," Fifth Edition. The average sales price per unit in 1998 was $76,300.

"The primary reason for this seeming strength in the market is that a clear majority of properties sold were built in the 1990s, and most of these were under five years old," according to Steve Monroe, editor of the report. "With the cost of construction often above $100,000 per unit, it is no wonder that the average price paid continued to rise, despite some softness and overbuilding in select markets."

In the independent living sector for 1999, the average price paid per unit actually stayed about the same, at $86,800 per unit, compared to $86,700 per unit for an independent living facility in 1998. Because the apartment units in independent living communities are larger than in assisted living facilities, the prices paid are typically higher.

The results for the nursing home acquisition market aren't as positive, according to Monroe. The average sales price per bed dropped only 1.5 percent to $40,700 per bed in 1999 for nursing homes. The median price, however, increased 17 percent to $38,000 per bed -- the highest level ever and just 7 percent below the average. In previous years, the median price had consistently been 15 to 20 percent below the average.

The results in the nursing home acquisition market were the big surprise in 1999, according to Monroe. "With the change in Medicare reimbursement and the number of bankruptcies among the large nursing home chains, everybody assumed that nursing home per bed prices would decline significantly in 1999. This did not happen, which demonstrates that demand remains strong for quality nursing homes."

The "Senior Care Acquisition Report," Fifth Edition, contains statistics on the assisted living, retirement housing and nursing home merger and acquisition market, including prices per bed or unit, capitalization rates, income multipliers and regional statistics. It also includes transaction information on each of the publicly announced senior care acquisitions in 1999. A new section will provide an overview of the senior care acquisition market in the decade of the 1990s.

The "Senior Care Acquisition Report" costs $495. For more information, or to order, call 800-248-1668.

Irving Levin Associates Inc. was established in 1948 and has headquarters in New Canaan, Connecticut. This privately held corporation publishes research reports and newsletters, and maintains databases on the health care and senior housing market. The firm has a strategic alliance agreement with Cushman & Wakefield, a national commercial real estate company, for the valuation of senior housing and health care properties.