Bed license values as at 30 June

ACCV reported that there had been some major changes in the market over the past 12 to 18 months.

Results of sales have varied with little or no activity towards the end of the year because of the lack of loan funds as a consequence of the economic downturn.

The major change from previous years is that low care bed licenses are fetching higher prices, which are wholly dependent on the value of bonds held. The higher the value of total bonds attached to these licenses, the higher the price prospective purchasers are prepared to negotiate.

The reported valuation guide was:

• Unencumbered pre-1997 bed licenses $50,000 to $60,000
• High care licenses sold with freehold as going concern $30,000 to $40,000
• Low care licenses sold with freehold ranged from $35,000 to $135,000 during the year

Values achieved depended on the total value of bonds held. While bonds are a liability for the holder, potential buyers are looking at the value of the income stream that goes with these bonds. The average ranged from $35,000 to $45,000.

Members are advised to be conservative in their valuations for low care facilities because there are many factors influencing the values of bed licenses other than just the total value of bonds held.

Building age and condition, location, demand for beds in the area and the number of beds also influence the value. For example smaller numbers of beds at a site would be held in a lesser light than say a large number of beds. Last year these values ranged from $20,000 to $30,000.

In general terms, it appears that the market value of metropolitan based licenses is in higher demand than rural located going concerns. Furthermore, it appears from ACCV’s investigations that there have been substantial increases in the number of residential aged care businesses on the market in Victoria during the past year.

Industry media has also reported that some providers are handing back licenses to the Department of Health and Ageing. Further industry feedback indicates that no Community Care packages or Extra Services High Care Bed licenses transactions occurred during the past year or at any previous point in time, as they have never come onto the open market. These licenses should be held at:

• Community Care packages – the annual value of subsidies = $12,925
• Extra Services High Care – $50,000 to $60,000

Please note that ACCV is not purporting to be a sworn valuer of bed licenses and the information provided is only a commentary of discussions ACCV has held with significant aged care industry figures, and is to be used as a guide.

It is for members to make decisions about the values they are carrying in their books. If members have had recent independent valuations carried out on their properties and bed licenses, they should use these values.