To generate a higher rate of return, prices need to fall for all assets as capital is redistributed back
toward risk free assets to make up for the reduction in demand from central banks, and the increase in supply from higher fiscal deficits.
The relatively large
risk premium associated with seniors housing (the difference between its cap rate and the
risk -
free 10 - year Treasury rate, estimated to be roughly 500 basis points) may help buffer the effects of higher interest rates on seniors housing cap rates, since the
risk premium has room to potentially shrink
toward the premium afforded to other commercial real estate
asset types.