• Alex Pettee, CFA

Healthcare REITs: Safe And Effective

  • Healthcare REITs - which were "ground zero" of the pandemic - were revived by the early vaccine rollout, but the "fourth wave" of the pandemic has slowed the positive momentum.

  • Senior Housing REITs - the hardest-hit sub-sector - were leading the recovery as occupancy rates appear to have bottomed in early 2021, benefiting from the red-hot and undersupplied housing market.

  • Staffing shortages have become critical issues at skilled nursing facilities - worsened by recent vaccine mandates - pressuring not only operating margins but also forcing some facilities to turn away new business.

  • For skilled nursing REITs, operator issues have re-emerged as government relief funds begin to dry up. Medical office and lab space, however, have been largely unaffected by these headwinds.

  • While near-term headwinds will persist until the pandemic abates, we remain optimistic on the long-term outlook for healthcare REITs. Baby Boomers are substantially larger and wealthier than any prior generation.

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Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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