U.S. Healthcare REITs to See Continued Growth in Senior Living Market

Healthcare Real Estate Investment Trusts (REITs) in the U.S., focusing on senior housing facilities, are expected to continue benefiting from several post-pandemic trends. These include increased demand, an aging population, higher healthcare spending, and favorable supply/demand dynamics, as a fall in new construction activities has led to higher funding costs. Major players in this industry, such as Welltower (NYSE: WELL), Ventas (NYSE: VTR), and Sabra Health Care REIT (NYSE: SBRA), are anticipated to experience consistent growth in both the occupancy rates of their senior living facilities and rental revenues throughout 2024.

After a significant decline in portfolio occupancy rates for these REITs in 2021 due to the COVID-19 pandemic, rates have been steadily improving since 2022. In 2024, Welltower and Ventas are projected to reach an 84% occupancy rate, while Sabra Health Care REIT is expected to hit 83%. This marks a notable increase from Welltower’s 74% occupancy rate in 2021 and Ventas’s and Sabra Health Care’s 78% rates.

Additionally, rental revenue from senior living facilities experienced a strong rebound in growth in 2022 following the pandemic-induced slowdown. The momentum is expected to continue, with Welltower estimated to see a +16% year over year increase in total rental revenue from senior living facilities in 2024, reaching $5.5 billion. Similarly, both Ventas and Sabra Health Care are estimated to see a +10% year over year rise in senior living rental revenue in 2024, reaching $3.2 billion and $259 million, respectively.