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Why Rising Interest Rates Don't Hurt REITs


While REITs are generally considered rate sensitive, rising interest rates may not affect them as much as we think, according to Deutsche Asset & Wealth Management director Joe Fisher in a recent podcast. The asset class will typically underperform equities in periods of rising rates, but bounce back and outperform the markets in periods following an increase. Rising rates raise the cost of capital for capital-intensive REITs and lead to it becoming “more expensive potentially for them to go out and grow the business," explains Fisher who anticipates continued lower interest rates from the Federal Reserve, which will improve cash flows and increase REIT performance moving forward.  [REIT]