https://www.ft.com/content/83c30df6-8158-11e8-bc55-50daf11b720dFinancial Times
Reits turn positive for the year
Joe Rennison in New York July 6, 2018
Investors seeking out havens as global trade disputes intensify have helped push US real estate investment trusts (reits), a vehicle for investing in property markets, into positive territory for the first time this year.
Reits are seen as a defensive investment option shielded from the heated trade disputes in part because they invest almost entirely in the US, “so they are less affected by what is going on elsewhere”, said Brad Case, chief economist at Nareit, an industry association.
The S&P 500 Reit sector inched into positive territory this week, up 0.5 per cent since the beginning of the year. The reit sector has traded up for nine of the last 11 weeks.
Reits had suffered earlier in the year as interest rates climbed, hitting a low in February to trade down 11 per cent from where they started the year.
The sector is seen as sensitive to rising rates, which can increase the cost of funding to purchase properties. Reits are also considered “bond-like” because they pay out regular dividends similar to the yield on a bond. As rates rise, the attractiveness of other investments can draw cash away from reits.
Reits have recovered as interest rates have re-trenched, with the yield on the benchmark 10-year Treasury falling from a peak of 3.11 per cent to 2.82 per cent on Friday.
Copyright The Financial Times Limited 2018. All rights reserved.
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