REFILE-REITs outperform broader market in rising rate environment
April 30, 2018, | Herbert Lash | Reuters
(Refiles to spell acronym as Nareit instead of former NaREIT in pargaraphs 8,9)[sic]
Rising interest rates this year are helping property-linked stocks outperform the broader U.S. equity market as investors bet real estate investment trusts (REITs) will provide a better return as the Federal Reserve tightens monetary policy further.
Higher rates can crimp corporate profit margins, a concern that led to a brief sell-off on Wall Street last week, but rents can be raised in a growing economy, which is helping lift REITs.
“Rising rates usually indicate a strengthening economy, which nearly always results in increased demand for all types of commercial property across the board: apartments, office, industrial and even retail,” said Jay Leupp, a managing director of Global Real Estate Securities at Lazard Asset Management.
