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High-Yielding Health-Care REITs Most Sensitive to Interest Rates

Among the major REIT sectors, health-care REIT stock prices and cap rates are the most dependent on low interest rates — historically declining when rates rise.

These REITs sign long-term leases with facility operators, resulting in stable cash flow, though with less ability to raise rents than REITs with shorter lease terms. With Treasury yields up over 70 bps from a July low, and a recent surge post-election, owners of health-care properties may see asset prices drop in coming months.

Companies Impacted: Welltower, Ventas, Omega, Sabra, Senior Housing Properties and HCP, the largest health-care REITs, are the most sensitive to changes in interest rates.


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