When interest rates start hitting the headlines, watch out. We have seen the largest interest rate increase over the past few months. We all know the Fed is going to slow down the bond buying efforts as the economy improves. As interest rates increase, the value and appetite of REITs to aggressively acquire decrease.
Over the past 5-7 years, the REITs have maintained the lowest cost of capital in the low interest rate environment. This has been a huge source of financing for many owners and buyers of Seniors Housing and long-term care properties. Billion dollar deals in the headlines for REITs placing capital. Could the end be near? Not yet . . . .
I don’t see rates drastically increasing in a short period of time. Rather, there will likely be smaller increases over a longer period of time. What does that mean? Act NOW. If you have thought about selling, now would be an ideal time. Sell in one of the strongest markets in history while you still can. It is only a matter of time before the increase in interest rates causes a disconnect between seller expectations and what a buyer can pay based on their cost of capital.
Please contact Ryan Saul for a proposal to determine your current market value.