• Vaccine Hesitancy: After a vaccine-driven revival, Healthcare REITs were the weakest-performing property sector in 2021 as the promising recovery in skilled nursing and senior housing has suffered Omicron-driven setbacks.
• Staffing shortages have become critical issues at skilled nursing and senior housing facilities, which operators attribute to a combination of COVID-related sick days, vaccine mandates, unemployment benefits, and uncompetitive wages.
• With labor costs soaring and government relief funds drying-up and reimbursement rates lagging, several skilled nursing operators have been left with the choice of either paying employees or paying rent.
• 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.
• While near-term headwinds will persist until the pandemic abates, we remain optimistic on the longer-term outlook for healthcare REITs. Baby Boomers are substantially larger and wealthier than any prior generation.

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