Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I think the relationship between REITs and interest rates is a bit more complicated.
A quote from someone at GreenStreet Advisors, one of the best independent REIT research firms:
“If interest rates rise, the first question to ask is, ‘Why?’” he says. “If it’s because the economy is doing better, you can raise rents.” And if the pace of rising rates is slow and steady, as expected, real estate owners can “mark to market leases along the way,” adds De La Rosa. In other words, it’s unlikely that a rate hike will be a shock to any REIT’s system.
REIT's have had some great returns and as more investors gain confidence their risk level increases pushing them into riskier asset classes such as equities or as of late crypto currencies and out of bonds, reit's & cash. The increase in interest rates may give some investors pause but I agree if rates are increasing because of a stronger economy than REIT's should have increased earnings from increased rents depending on length of leases.
I personally think it is healthy for there to be an asset rotation and I will be adding to my REIT positions for lower prices for when the sector becomes in favor again.
well look at the reits , what do you see with 2 years of rates rising ?
First of all, based on reading some of your prior posts I am impressed with your knowledge of the market. I always learn something when I read your posts! I am a bare novice compared to you.
That said, the one little corner of the market I know something about are REITs, though I am a far cry from an expert.
Yes, the last two years have been meager returns for REITs. However, with regards to REITs in prior rate tightening cycles:
"Contrary to common misconception, rising interest rates do not necessarily lead to poor REIT performance. In fact, REITs have generated an annual return of 12.6 percent over six monetary tightening cycles that have occurred since 1979." (Granted this quote is from 2013)
Also, it is worth noting that not all REIT sectors in 2017 performed poorly. Data Center and Industrial/Warehouse REITS were up about 32 percent and 20 percent, respectively.
i don't follow reits at all . but i do call it as i see it . the last 2 years since rates started rising has not been good for them . will it continue if rates rise ? beats me .. but we will see how it unfolds as it does .
my contra fund was up over 30% and i did not have to invest in nigeria .
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
