Although historically an economic defensive sector due to its needs-based nature, senior living has been hit hard by the COVID-19 pandemic, and despite positive news on vaccine rollouts, headwinds likely will persist through mid-year before the sector “finds its footing” and begins to recover. That’s according to the U.S. Senior Housing 2021 Outlook Report released Friday by Green Street Real Estate Analytics.

Report authors noted that due to the sector’s operating intensity and vulnerable population, senior living has been one of the sectors most affected by the pandemic, with net operating income expected to decline approximately 30% compared with pre-COVID levels. That being said, Green Street anticipates that the sector likely will rebound over the next few years, expecting it to reach new highs in 2024.

Despite the current operating challenges, however, private-sector values have not declined dramatically, the firm said.

“While the senior housing transaction market isn’t as deep as the major property sectors, there has been a recent flurry of deals across the quality spectrum that suggest property values are down roughly 5% vs. pre-COVID levels,” the authors wrote. “At current pricing, investors can expect risk-adjusted unleveraged total returns in the mid-6% range in the private market, with public market returns closer to the high-5% range. As such, the sector appears to be roughly fairly valued in both the private and public markets relative to other property types.”