Healthcare REITs: Life After The Pandemic
Healthcare REITs - which were the weakest-performing property sector in 2021 - have been one of the top-performing REIT sectors in early 2022 as COVID headwinds finally begin to abate.
After a decade of lackluster performance and strenuous portfolio repositioning, the long-awaited demographic tailwinds are finally arriving for senior housing REITs, while new supply growth has moderated.
Encouragingly, the Omicron COVID wave merely slowed - but didn't derail - the demand recovery. Staffing shortages have been the more critical issue of late, and some operators are faring better than others.
With nursing shortages likely to persist, and with a dimming outlook for significant further COVID relief funds, caution is warranted for Skilled Nursing and "public-pay" healthcare REITs which appear fully valued.
Lab space demand from biotechnology and pharmaceutical companies remains insatiable, however, and has actually seen accelerating demand from the pandemic. Key geographic clusters serve as barriers to entry.