The Real Deal Miami

REITs to keep rolling along in 2015, experts predict

Despite an expected rise in interest rates, 2015 will likely be a strong year for property trusts

January 02, 2015 11:45AM

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From left: Steven Roth and Stephen Green

From left: Vornado Realty Trust’s Steven Roth and SL Green’s Stephen Green

Real estate investment trusts will likely continue to perform well in the new year, even though interest rates are poised to increase.

In 2014, REITs were some of the hottest stocks of the year, according to the Wall Street Journal. While changes to interest rates might cause a tough year for REITs — the lower the interest rate, the more attractive it is to invest in a REIT — experts told the newspaper that there are more factors at play.

In 2015, experts predict a stronger economy and more mergers and acquisitions activity, according to the newspaper. Those two factors could overshadow rising interest rates, analysts predicted. Thus, REITs may outperform the broader stock market even as the days of historically low rates starts to fade.

In 2014, real-estate stocks produced a total return of 32.3 percent including dividends, according to the FTSE Nareit Equity REITs Index cited by the newspaper. That marks the highest total return since 2006, when the return on REITs was 35 percent. The S&P 500 stock index produced total returns of 14.9 percent last year. [WSJ]Claire Moses

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