«While the impact of easing is most readily observable in stock market volatility, low short - and long - term interest rates also relieve some of the upward
pressure on cap rates and mortgage financing costs.»
However, the demand coupled with a pullback in expansion among retailers has also created a supply - constrained market and more
pressure on cap rates in that segment, especially among top credit tenants.
And this outcome is entirely possible since institutional investor interest in the sector is quite strong, keeping downward
pressure on cap rates.
Once the economy gains momentum and interest rates start to rise, we will see upward
pressure on cap rates as some investment capital is siphoned from the single - tenant sector.
Not exact matches
That prospect was clear this month in Massachusetts, when voters refused to agree to raise a
cap on charter school expansion, and Moody's, the
rating agency, applauded the move, saying it would allow urban districts to maintain their current financial operations without added
pressure from charters that could create virtually insurmountable money problems.
Most (if not all) radiator
caps have a
pressure release system, that could be failing (the
pressure rating should be
on the
cap somewhere depending
on the style).
The
cap limits how high the bank can nudge up the interest
rate on your loan, thus limiting your monthly payments (and blood
pressure).
So when foreign investors exit emerging markets due to panic over
rate increase in the US, there is
pressure on large
caps.
If such narrowing spreads occur, seniors housing
cap rates may not experience the same magnitude of upward
pressure that expected rising interest
rates could impose
on other commercial property types.
If such narrowing spreads occur from today's 500 - basis point differential, seniors housing
cap rates may not experience the same magnitude of upward
pressure that the expected rising interest
rates could impose
on other commercial property types.
Alternately,
Cap Rate would also increase if the Market value of the Property decreases due to some economic factors provided NOI is still same or if the location becomes less desirable (but this would also put
pressure on your NOI).
An uptick in
cap rates indicates downward
pressure on prices.
The current low
cap rate environment and the looming threat of an interest
rate hike should seemingly put
pressure on owners to bring their properties to market, but most industry experts believe that any increase in
cap rates or interest
rates will be counterbalanced by an increase in rental
rates, and therefore net operating income (NOI).