Improving property fundamentals across the board are brightening the outlook for REITs going into this year. The overall U.S. economy continued its steady but slow recovery and interest rates remained low. Investors have latched onto concern over a potential rate increase as the strengthening economy and improved job creation. The Federal Reserve strategy is allowing rates to rise after the recovery achieves a sustainable level. U.S. 10-year interest rates offer a comfortable cap rate spread over Treasuries, BBB bonds and foreign interest rates and should continue to spur investor demand for U.S. real estate from global investors.
Excerpts from the Article:
Improving property fundamentals across the board are brightening the outlook for REITs going into the year. And yet, just like clockwork, the lingering specter of rising interest rates has some investors on edge. It was the same worry that plagued the industry going into 2014, but one that never materialized as the overall U.S. economy continued its steady but slow recovery and interest rates remained low.Citation and link:
Heschmeyer, Mark. “Can strong fundamentals help REITs overcome Investors Sensitivity to Interest Rate? .” CoStar News., 28 Jan. 2015 Web. 30 Jan. 2015.