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Rising rates? It may be time to buy, not sell, those REITs

June 11, 2018

Rising rates? It may be time to buy, not sell, those REITs

May 30, 2018 | Andrew Osterland | CNBC

Interest rates are rising. Sell your REITs! That’s the usual knee-jerk reaction of investors when the economic cycle is getting old and the Federal Reserve Bank is raising interest rates.

True to form, real estate investment trusts were clobbered in February after the Fed hiked short-term rates again and the 10-year Treasury bond yield spiked to 2.95 percent. The FTSE Nareit All REITs index was down almost 12 percent, although it has since recovered more than half that ground.

Like other high-dividend-paying stocks, REITs are largely sensitive to rising interest rates as their yields start to look relatively less attractive versus fixed-income alternatives. With rates again trending up, it could be a bumpy ride for the REIT market going forward.

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Derek Hayes
Blue Vault's Services
April 14, 2016

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