Alex Pettee, CFA
Healthcare REITs: Back On Life Support
The United States healthcare system has taken center-stage amid the coronavirus outbreak. Healthcare REITs have been on a roller-coaster ride amid evolving forecasts of the severity of the pandemic.
Healthcare REITs were slammed during the early-onset of the outbreak but have recovered in recent weeks as death rate estimates have, thankfully, been revised drastically lower from early catastrophic figures.
While likely less devastating on underlying demographics than once feared, no healthcare real estate sector is immune from the significant near-term and long-term effects of the pandemic.
For senior housing, skilled nursing, and hospital REITs already dealing with soft underlying fundamentals, the pandemic will put a sizable dent in near-term demand and drive significantly higher expense growth.
The positive long-term outlook for senior housing remains intact as the long-awaited demographic-driven demand boom is finally arriving. Behaviors and attitudes towards senior housing and telemedicine, however, shouldn't be overlooked.