Interest rates impact REITs

Article Excerpt

Prices of many REITs are down from their 2016 highs party due to investor worries about rising interest rates. Traditionally, high-yielding equity investments like REITs and utilities are said to suffer when interest rates rise. They generally have a lot of debt, and higher rates make it more expensive for them to raise money and refinance existing debt. As well, those high-yielding units and shares compete with fixed-income instruments for investor interest. However, higher interest rates are usually accompanied by increased economic activity and growth. That higher growth is in turn good for REITs, pushing up occupancy levels, rents, and unit prices. prices…