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Decline in REIT Prices a Telltale Sign


FAM Real Estate Investment Trust CEO Shant Poladian describes the current REIT environment as a period when "Atlas shrugged." The scaling back of monetary stimulus will lead to a significant jump in interest rates over the next several years, he tells us—but Vancouver is a little more influenced by offshore money and supply constrained, so it’s not as interest-rate sensitive. “Unless there is commensurate growth in rental rates, we are going to see property prices drop,” he says. “A lot of preconceived notions about asset values, cap rates, and institutional support are going to be put to the test.” The decline in REIT prices last year was a leading indicator of this trend. (The proverbial canary in the office building.)