Cost of nursing home care decreases in 2024 while mergers and acquisitions increase
In 2024, the prices of skilled nursing beds saw a decrease, with an average price dropping to $83,800 from $97,700 in the previous year. Despite some exceptions due to increased mergers and acquisitions activity post-pandemic, the reasons behind this decline were associated with the prevalence of underperforming properties in the market. In its newest report, the 2024 Senior Care Acquisition Report, Irving Levin Associates highlighted that the year was characterized by a significant number of sales involving struggling assets, but there were notable high-quality deals and portfolio acquisitions towards the end of 2024 in the seniors housing sector.
A couple of years ago, nursing home bed prices reached a peak of over $100,000 per bed, with NIC MAP registering a high of $106,340 in the third quarter of 2022. During this time, the deal volume was relatively low, and certain investors had expressed concerns about potentially inflated values within the market. Throughout 2023, many real estate investment trusts and other prominent investors in skilled nursing facilities remained reserved until 2024. However, in the following year, there was a surge of 37% in mergers and acquisitions transactions, with Irving Levin tracking 708 publicly announced deals, a notable increase from 518 in 2023.
Ben Swett, the managing editor of The SeniorCare Investor, attributed the rise in M&A activity to favorable changes in the capital markets and seniors housing operating environments. He stated, “Buyers also announced relatively more high-quality-asset and portfolio deals in the fourth quarter, helping to push average prices up in the seniors housing sector, which is expected to continue in 2025.” Although Irving Levin did not disclose the specific number of skilled nursing-related deals in 2024, there has been an overall trend indicating a busy year for companies with significant skilled nursing assets.
The Ensign Group, for instance, expanded by 20% in the previous year after acquiring 57 new operations, with plans for further growth in 2025 through several additional deals. Similarly, Sabra Healthcare REIT’s chief investment officer, Talya Nevo-Hacohen, highlighted the current robust nature of the transaction market in skilled nursing. Nevo-Hacohen emphasized the abundance of capital seeking investment opportunities in this sector, illustrating the continued interest and activity in deal-making within the industry.
For those interested in a comprehensive analysis, the complete 2024 Senior Care Acquisition Report is available for purchase from LevinPro LTC. Readers can discover additional insights into the seniors housing sector in today’s McKnight’s Business Daily.
