Misconceptions about REITs
1) REITs will struggle in times of high inflation (FASLE)
2) REITs will struggle in times of rising interest rates (FALSE)
REITs have been a TOP Performing asset class since the early 1970s (TRUTH)
Let me explain below๐๐
1) REITs will struggle in times of high inflation (FASLE)
2) REITs will struggle in times of rising interest rates (FALSE)
REITs have been a TOP Performing asset class since the early 1970s (TRUTH)
Let me explain below๐๐
1/ Many REITs can perform well during times of high inflation
Many REITs are protected with the built in Lease escalators they add into their lease agreements
This also protects investors during times of slow economic growth
Many REITs are protected with the built in Lease escalators they add into their lease agreements
This also protects investors during times of slow economic growth
2/ Net Lease REITs are one of my favorite types of REITs to invest in
$WPC W.P. Carey for example is a diversified REIT that has lease escalators in 99% of their leases
Of those, 60% of the lease escalators are tied to CPI
$WPC W.P. Carey for example is a diversified REIT that has lease escalators in 99% of their leases
Of those, 60% of the lease escalators are tied to CPI
3/ As we saw today, CPI is at its highest levels since 1981!
This is a strong tailwind for a REIT like $WPC for when their leases get trued up
This is a strong tailwind for a REIT like $WPC for when their leases get trued up
4/ The misconception that REITs will perform poorly during times of rising interest rates is talked about often yet so FALSE from the actual results
5/ In fact, historically, REITs have been some of the best performers during times of rising rates
According to research from Cohen & Steers (CNS), REITs have returned 17.4% on average in the next 12 months following rate hikes. That's nearly 2x better than regular stocks
According to research from Cohen & Steers (CNS), REITs have returned 17.4% on average in the next 12 months following rate hikes. That's nearly 2x better than regular stocks
6/ Rising interest rates are usually done during times of an improving economy, which benefit REITs
Unbeknown to many, REITs are not as highly leveraged as many think, which is where much of this misconception comes from
Unbeknown to many, REITs are not as highly leveraged as many think, which is where much of this misconception comes from
7/ Certain sectors, such as Apt REITs are positively impacted by rising rates as higher rates make it less affordable to purchase a home
8/ The facts are the facts and REITs have performed quite well in many different economic backdrops
What are you waiting for? Start looking at gaining Real Estate exposure with the help of REITs
What are you waiting for? Start looking at gaining Real Estate exposure with the help of REITs
Here are 2 MUST OWN REITs in my book:
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