Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

RE: Why REITs are roaring despite rate threat

[Baer1]

Thanks oris, I was going to post this up, but you beat me to it. The thing that puzzles me in this article is the sensitivity of the REIT share price to bond yields. Most REITs have taken this opportunity to lock in VERY low interest rates for 5-15 year terms. So why would short term fluctuations in bond yields, even if they do foreshadow increasing interest rates, affect our REITs? REITs were profitable and producing stable yields prior to the interest rate collapse. What has been affected, positively, is their ability to build out and acquire new properties, while maintaining their existing portfolios. Now we are in an interesting speculative period when mergers and acquisitions can occur, due to an abundance of free cash and higher share prices for the mid and top tiers. Notice the lack of dividend increases during this "abundant" time. The REITs are positioning themselves for the inevitable increase in interest rates, not by paying down debt, but by increasing assets.

Thoughts?