Senior housing industry fundamentals likely will remain “negative and choppy” for the foreseeable future, but its long-term thesis looks strong, according to investment banking firm Baird.

Near-term concerns led Baird to cut its estimates for funds from operations per share from 2% to 6% for senior housing real estate investment trusts Healthpeak Properties, Ventas and Welltower ahead of their fourth-quarter earnings releases. Baird also is looking for data on senior housing vaccination rates, which the firm says is key to stabilizing occupancy, according to a Seeking Alpha article Friday.

Overall, Baird noted, the longer-term supply/demand picture for senior housing is “favorable,” considering demographics-driven demand and a decline in development starts as a result of the pandemic. The firm expects development to stay depressed in the near term, given “a dearth of construction financing and some developers shifting their focus to acquisitions given available discounts to replacement cost.”

Last month, investment banking firm BMO Capital Markets predicted an elongated recovery for the senior living industry, with cash flows not recovering to pre-pandemic levels until about 2025.