Interest Rates Tic Higher – REITs Taking Losses

The 10 year treasury is moving higher today by 5 basis points recently trading at 2.53% which is the highest yield in the last 8 months or so.

As we have continually seen, when rates move higher, REITs take losses in the 1/2 to 1% range.

These minor rate movements are of little real consequence to the overall financials of REITs, but markets move as they do and the pain that occurs is real to investors.

With the FED now letting bonds roll off of their balance sheet we believe that there will be rate pressure all year as economic conditions remain firm not only in the U.S., but in Europe and Japan.

We think rates will move higher to the 3% area before the year is out and we just hope that they move in a slow and orderly fashion.  Assuming they move slowly share prices will adjust and recover a bit realizing that there is little to no real affect on REIT financials from slow, small interest rate moves.