Healthcare real estate investment trusts, many of which have been heavily affected by the coronavirus pandemic, have shown signs of life over the past quarter in terms of stabilizing fundamentals. That’s according to an analysis Tuesday on Seeking Alpha.
Among senior housing REITs in particular, the pandemic has put a significant dent in near-term demand and has driven significantly higher expenses. Interim updates, however, suggest the worst may be over, the investment news website reported. Meanwhile, the pandemic further aggravated issues for skilled nursing REITs, but most of these operators also have been significant beneficiaries of government relief programs.
Rent collection among healthcare REITs actually has been among the strongest in the real estate sector, with near-perfect rent collection among triple-net senior housing communities and skilled nursing facilities, offset by depressed rent collection in RIDEA senior housing communities, the analysis noted. Of note, however, New York-based New Senior Investment Group and Newton, MA-based Diversified Healthcare Trust have been hit especially hard since the start of the outbreak and have yet to enjoy a similar bounce-back.
“While fundamentals have been far more challenged than other ‘essential’ property sectors like technology, industrial and housing REITs, we think that investors seeking higher-yielding REITs should generally favor healthcare REITs over other troubled sectors facing more concerning long-term secular headwinds,” the analysis concluded. “The positive long-term outlook for senior housing REITs, in particular, remains intact as the long-awaited boomer-driven demand boom is finally arriving.”