REITs Attractive Even With Rising Rates
A Seeking Alpha contribution
Summary
- A rapid increase in interest rates is a risk for REITs, not simply higher rates.
- Rates will remain historically low for some time even after rate increases begin.
- Economic growth and a bull market in stocks are bullish for REITs.
A low-yield environment has caused investors to search for financial instruments that provide a higher yield than bank savings and Treasury bonds, forcing them to take on more risk. While low interest rates have hurt investors, they are enabling real estate to reestablish a firm footing after the 2008 financial crisis. The strong growth in the U.S. economy along with a favorable supply-demand balance is driving an increased appetite for commercial real estate. The recovery is being led by a demand in multi-family housing and self-storage units, as well as a slight uptick in regional malls. The combination of low interest rates and economic growth has resulted in commercial real estate outperforming the broader U.S. stock market…. To continue reading, please Click Here.
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