While the skilled nursing sector will continue to experience occupancy recovery well beyond this year, the average sale price of facilities per bed has been the highest since 2016.
Nursing care assets have traded with an average sale price of $90,700 per bed, according to an outlook report released by Calabasas, Calif.-based real estate brokerage firm Marcus & Millichap. The report monitors data from March 2020 to March 2021.
Smaller properties are trading more frequently, the report stated, and vaccination efforts coupled with pent-up move-in demand will help alleviate investor risk tolerance in the sector.
Private investors accounted for 90% of buying activity, favoring “sunbelt markets,” Marcus & Millichap research associate Benjamin Kunde stated in the report.
Florida trades doubled on an annual basis; deals in the state accounted for 25% of national market flow.
Real estate investment trusts (REITs) and institutions are becoming more active mid-2021 after pausing acquisitions coming into the new year, according to preliminary data.
Areas with the strictest lockdowns — namely the Pacific and Northeast regions of the country — experienced the “sharpest contractions” in census numbers. The national stabilized occupancy rate plummeted 1,270 basis points year over year.
Despite census downturn, average daily occupancy rates are increasing. The Pacific market led this trend with an increase of 2.8% year over year, supported by government reimbursement programs and federal stimulus monies. The Great Plains region follows with 2.3% and 1.6% in the Mid-Atlantic.
SNF beds decreased by 2,060 during the time frame studied by Marcus & Millichap. About 1,600 beds were under construction at the end of the first financial quarter this year.
Bed stock is well below the quarterly average: “National stock depletion has been ongoing for most of the past decade, including an acceleration in 2018 prior to the challenges of the health crisis,” Kunde added. “As more of the baby boomer generation advances past the age of 75, demand for beds will escalate.”
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