Which factor is least likely to affect the capitalization rate?

The capitalization rate, often referred to as the cap rate, is a key metric in real estate that helps investors assess the return on an investment property. It is calculated by dividing the property's net operating income (NOI) by its current market value or acquisition cost.

Market interest rates, property location, and operating expenses significantly influence the cap rate. Market interest rates affect how investors view the risk and potential return of different investments; as these rates rise, investors may demand higher returns, thus increasing the cap rate. Property location plays a critical role in determining the value and rental income potential of a property; properties in desirable areas typically have lower cap rates because they are in higher demand. Operating expenses also directly affect the net operating income, and thus, the cap rate, since higher costs can reduce the rate of return on the investment.

On the other hand, borrower creditworthiness, while important in the context of lending and financing, tends to have a lesser direct impact on the capitalization rate itself. The cap rate is more concerned with factors that affect income generation and property valuation rather than the individual characteristics of the borrower. Therefore, this factor is least likely to influence the cap rate compared to the other options, which directly affect property income and market perceptions.