Motley Fool Money What Do Higher Interest Rates Mean for REITs?
Sep 25, 2022
John Worth, the Executive Vice President for Research and Investor Outreach at Nareit, dives into the complex world of Real Estate Investment Trusts (REITs). He discusses how some REITs are performing well despite falling stock prices and the lingering effects of COVID on commercial real estate. Worth highlights the resilience of the sector amid rising interest rates and inflation. He also talks about the trend of private equity firms buying public REITs, shedding light on the ongoing mergers and acquisitions shaking up the industry.
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REIT Performance Gap
- REITs are experiencing a disconnect between strong operational performance and declining stock prices.
- Despite record-high earnings, REITs are down about 12% for the year.
COVID's Impact on Real Estate
- The COVID-19 pandemic has highlighted the importance of portfolio diversification in real estate.
- While some sectors suffered, others like industrial, data centers, and self-storage thrived.
Lasting Effects of COVID-19
- The pandemic has accelerated the adoption of digital technologies, impacting real estate usage.
- This shift includes increased use of data centers, cell towers, and the evolving role of offices.