REITs rally in Trump era despite climbing interest rates

Sector continues to lag behind broader market

New York /
Jan.January 24, 2017 05:12 PM

Despite rising interest rates, U.S. real estate investment trusts are enjoying some upward momentum in the Donald Trump era.

REIT shares have climbed 5.8 percent since interest rates started rising after Election Day as investors expect looser regulations and economic growth, the Wall Street Journal reported.

Office-centric REITs such as SL Green Realty TRData LogoTINY and Vornado Realty Trust have seen shares rise in particular as new policies out of Washington are expected to spur jobs.

Net-lease REITs typically feel the pinch most when interest rates rise, but they’ve bounced back after a short period of uneasiness when the 10-year Treasury yield climbed to 2.6 percent in December.

Shares of the largest net-lease REIT by market capitalization, Realty Income Inc., have climbed 3 percent since Election Day.

Publicly traded REITs trimmed their debt levels from 58 percent of total book-assets ratio in early 2009 to 49 percent this past September, according to the National Association of Real Estate Investment Trusts.

Still, some are skeptical and think the surge is going to be short-lived. Shares of REITs have lagged in the Dow Jones Industrial Average, which is up 8.4 percent since Election Day.

And policies like Trump’s proposed border and trade policies could negatively impact the retail industry.

“We think overall it’s going to be a choppy year for REITs,” said James Sullivan, managing director at BTIG Equity Research. [WSJ]Rich Bockmann


Related Articles

arrow_forward_ios
Make Greenland Great Again? Trump wants to buy Arctic territory
Make Greenland Great Again? Trump wants to buy Arctic territory
Make Greenland Great Again? Trump wants to buy Arctic territory
Hamptons’ priciest summer rental to host MAGA extravaganza next month
Hamptons’ priciest summer rental to host MAGA extravaganza next month
Hamptons’ priciest summer rental to host MAGA extravaganza next month
Photo Illustration of Donald Trump (Illustration by Kevin Rebong for The Real Deal)
Treasury Department must give Trump’s tax returns to Congress: DOJ
Treasury Department must give Trump’s tax returns to Congress: DOJ
From left: DigitalBridge CEO Marc Ganzi, Donald Trump,  and Tom Barrack (Getty, Ganzi by Sonya Revell)
De-Colonized: How Tom Barrack’s firm broke with its founder
De-Colonized: How Tom Barrack’s firm broke with its founder
Democrats look to curtail tax break for “pass-through” businesses
Democrats look to curtail tax break for “pass-through” businesses
Democrats look to curtail tax break for “pass-through” businesses
Trump CFO Allen Weisselberg (Getty)
Trump CFO Allen Weisselberg quit roles even before indictment
Trump CFO Allen Weisselberg quit roles even before indictment
Related Companies chairman Stephen Ross and Harris Blitzer Sports CEO Scott O'Neil with Central Park’s Wollman Rink (Getty)
City replaces Trump as Central Park rink operator — with Trump pals
City replaces Trump as Central Park rink operator — with Trump pals
Donald Trump and Allen Weisselberg (Getty)
Trump Org, CFO systematically cheated on taxes, prosecutors say
Trump Org, CFO systematically cheated on taxes, prosecutors say
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...