Sherman & Roylance Skilled Nursing Sales: A Comprehensive Overview

The skilled nursing and senior housing sector has entered a pivotal moment. Demographic shifts are swelling the ranks of older adults, capital markets are gradually stabilizing, and operating fundamentals are inching back toward pre-pandemic levels. Within this intricate tapestry, Sherman & Roylance (S&R) stands out as a boutique brokerage that consistently turns market complexity into opportunity. The firm’s recent closings, deep industry relationships, and disciplined approach to confidentiality position it as a bellwether for where skilled nursing real estate is headed next.

This article explores the landscape surrounding skilled nursing transactions, spotlights S&R’s 2024 deals, and analyzes the market forces that will shape activity through 2025. Investors, operators, and lenders will gain a clearer sense of why S&R’s strategy resonates in an industry where margins can hinge on subtle regulatory nuances and every basis point of cap-rate movement.

Understanding the Skilled Nursing Investment Climate

At first glance, 2024 might read like a paradox. Per-bed pricing fell, yet transaction counts surged. According to data compiled by Lument, more than 700 publicly announced seniors housing and care transactions closed during the year, a 26 percent leap over the previous record set in 2022. Skilled nursing alone accounted for 221 deals, 36 percent higher than 2023’s total. These figures illustrate pent-up demand created by a pandemic pause, owners eager to rebalance portfolios, and buyers who see operational upside in underperforming assets.

Pricing moved in the opposite direction. Research from McKnight’s Long-Term Care News shows average valuations dipping to roughly $83,800 per bed, down nearly $14,000 year over year. The influx of distressed or transitional properties dragged averages lower, while best-in-class facilities still commanded healthy premiums. For investors with turnaround expertise, falling prices offered a rare chance to secure licenses, beds, and physical plant at attractive entry points.

This dynamic landscape is further complicated by evolving regulations and changing consumer preferences. As the demand for skilled nursing care continues to shift towards more personalized and home-like environments, operators are increasingly focused on enhancing the quality of care and the overall resident experience. This trend has led to a renewed emphasis on facility upgrades and innovative service models, which can significantly impact the long-term viability of investments. Investors are now looking beyond just the numbers; they are considering how well facilities align with these emerging trends and the potential for future growth.

Moreover, the skilled nursing sector is experiencing a demographic shift, with an aging population that is more informed and demanding about their care options. As baby boomers enter retirement age, there is a growing expectation for higher standards of care and more diverse offerings. This demographic change is prompting many skilled nursing facilities to rethink their operational strategies, focusing on technology integration and staff training to meet these new expectations. Investors who recognize and adapt to these trends may find themselves at a significant advantage in a competitive market.

Sherman & Roylance: Boutique Expertise in a Scaling Sector

Sherman & Roylance was built for these very conditions. With more than 150 years of combined experience, the firm focuses exclusively on skilled nursing, assisted living, and senior housing real estate. Strict off-market processes keep information flows tight, shield staff morale at facilities that may be on the block, and ensure only qualified operators receive a look at listings. That discretion is more than marketing polish; it is core to achieving outsized value in a sector where rumors can spook referral sources or staff.

The brokerage’s service line spans valuation, buyer and seller representation, healthcare bankruptcy guidance, and senior housing development consulting. Because S&R’s principals have owned and operated long-term care facilities themselves, financial analysis never stops at EBITDA multiples. Surveys of local case-mix indices, labor market constraints, and Medicaid rate reform color each offering memorandum, helping buyers see exactly how an asset can be repositioned.

Recent Closings Illustrate Strategic Range

Two 2024 transactions showcase how S&R pairs nuanced underwriting with the right match of operator and capital. In February, the firm sold a 104-bed skilled nursing facility in Texas that had opened its doors only six years earlier. Licensed for 94 Medicare and 10 Medicaid beds, the property was underperforming relative to physical quality. S&R’s campaign highlighted the gap between current census and attainable census, framing the acquisition as a value-add play rather than a core-plus purchase. Buyers responded, and the closing delivered a fresh start for residents and staff alike.

Eight months later, S&R arranged a long-term triple-net lease for a 144-bed facility in Santa Cruz, California. Built between 1967 and 1970 and operating at roughly 70 percent occupancy, the property found new stewardship through an operating duo that formed a bespoke entity to hold the license. California’s nuanced licensing environment and seismic retrofit requirements make transactions in the state uniquely challenging. By architecting the leasehold structure—rather than a fee-simple sale—S&R allowed the outgoing owner to retain real-estate upside while transferring operational responsibility to entrepreneurs eager to scale across the West Coast.

Deep Financial Analysis Drives Competitive Outcomes

Whether the assignment involves a corporate carve-out or a single, legacy asset, S&R relies on rigorous data. Each underwriting package dissects Medicare staffing star ratings, Five-Star quality measures, and historical survey outcomes. Financial statements are recast to reflect normalized staffing levels, current reimbursement ceilings, and documented census recovery trends. In multisite portfolios, lagging facilities are stress-tested to reveal whether drag is cyclical or systemic. This proprietary model—tempered by decades of real-life operating results—helps buyers sidestep common pitfalls that can turn an attractive cap rate into an unplanned recapitalization.

M&A Tailwinds and Pricing Realities

While per-bed prices compressed in 2024, the macro forces underpinning demand remain intact. The oldest baby boomers are now in their late 70s, and the 80-plus cohort will swell by more than 50 percent over the next decade. At the same time, the number of skilled nursing facilities has stagnated, and replacement costs continue to rise. Construction hard costs in California and Texas today frequently exceed $400,000 per bed when land, seismic upgrades, and inflation adjustments are tallied.

These dynamics explain why deal volume can increase even as averages dip: buyers perceive a short window to acquire at below-replacement pricing. Moreover, capital allocators are widening their lens. Debt funds have stepped in where GSE financing proves arduous, and regional banks—eager for yield—are returning to the space after re-balancing real-estate exposure. S&R keeps a curated roster of such lenders, ensuring that earnest-money deadlines do not slip simply because financing sources lacked sector literacy.

Occupancy Recovery Accelerates Operational Upside

Occupancy, a vital component of skilled-nursing net operating income, has been trending upward. National certified-bed census reached roughly 77 percent by mid-2023, up from a pandemic trough near 67 percent. Lument notes that momentum continued into early 2024 as infection-control regulations normalized and agency staffing pressures eased. Facilities with strong hospital referral networks, such as the Santa Cruz asset S&R placed, can now leverage pent-up demand for sub-acute rehab stays.

For underwriting purposes, S&R does not assume a straight line back to 2019 occupancy. Instead, projections incorporate local readmission penalties, managed-care penetration, and the “two-population” phenomenon—short-stay Medicare residents and long-stay Medicaid residents—that often complicates staffing grids. By quantifying risk in this way, buyers gain the confidence to bid aggressively, knowing contingencies have been priced in rather than glossed over.

Market Outlook Through 2025

Analysts forecast steady expansion. A recent study by 360iResearch projects skilled-nursing revenue will grow from roughly $259.6 billion in 2024 to $274.1 billion in 2025, a 5.5 percent compound annual growth rate. Technology—ranging from remote patient monitoring to AI-powered staffing tools—will unlock efficiencies, while value-based purchasing incentives are expected to reward facilities that keep rehospitalizations low.

Policy risk always looms, but recent CMS rulemaking has signaled a willingness to calibrate rather than upend reimbursement. Operators who demonstrate acuity-specific care models and invest in infection control appear best positioned. In the capital markets arena, S&R anticipates continued bifurcation: Tier-1 assets in coastal metros will command cap rates in the upper 5s to low 6s, while transitional or rural properties will price in the mid- to high-teens on a cash-on-cash basis but require heavier managerial horsepower.

Why Owners and Investors Choose Sherman & Roylance

Reputation, of course, is earned. S&R’s track record surpasses $5.5 billion in lifetime transaction volume, yet numbers alone do not capture the firm’s differentiators. Confidentiality protocols mean employees learn of a sale only when regulatory filings require disclosure. Listing packages circulate among a tightly curated investor base, preventing “shop-worn” assets and protecting seller leverage. On the buy side, operators refuse to waste time on mass-market teasers; they engage S&R because every offering arrives rigorously vetted and paired with a capital structure that can close.

Key Takeaways for Market Participants

1. Transaction velocity is outpacing prior peaks, even as average pricing moderates. This divergence underscores opportunity for well-capitalized buyers.
2. Deep financial analysis—incorporating reimbursement shifts, local labor constraints, and occupancy recovery—separates successful closings from near misses.
3. Sherman & Roylance’s boutique, off-market approach safeguards confidentiality, which remains paramount in a people-centric business.
4. Forward-looking owners should weigh whether 2024’s pricing dip may represent the cycle’s nadir, particularly given construction cost inflation.
5. Operators that lean into technology and integrated-care partnerships will attract premium valuations as value-based reimbursement expands.

Final Thoughts

Skilled nursing assets sit at the intersection of healthcare delivery and real-estate investment—two domains that rarely move in lockstep. In that liminal space, Sherman & Roylance offers translation. The firm converts regulatory intricacies into underwriting assumptions, couples operational insight with capital-market fluency, and orchestrates transactions that satisfy sellers, empower operators, and deliver durable returns to investors.

As demographic tailwinds intensify and policy frameworks evolve, market participants will need advisors who can parse nuance at the speed of commerce. Sherman & Roylance has made that discipline its hallmark, and the 2024 deal slate suggests the firm will remain a pivotal force in skilled-nursing real estate well into 2025 and beyond.