What Do Higher Interest Rates Mean for REITs?

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The Motley Fool

Business, Investing

4.3 • 3.1K Ratings

🗓️ 25 September 2022

⏱️ 20 minutes

🔗️ Recording | iTunes | RSS

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Summary

Stock prices don’t always reflect business performance. That’s the case for many real estate investment trusts (where some occupancies are above pre-pandemic highs) but the effects of rising interest rates may be in its early innings. John Worth is the executive vice president for research and investor outreach at the National Association of Real Estate Investment Trusts, or Nareit. Deidre Woollard and Matt Frankel caught up with Worth to talk about: - Strong REIT business performances and sliding stock prices - The lasting effects of COVID on commercial real estate - Why private equity firms are buying up public REITs Companies mentioned: PLD, DRE Hosts: Deidre Woollard, Matt Frankel Guest: John Worth Producer: Ricky Mulvey Engineers: Dan Boyd, Brandon Gentry Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	So one of the things we've seen is that as rates of
0:03.9	risen, we've seen rates really actually reduce the amount
0:08.4	of debt they're issuing because they don't have a lot of debt
0:12.1	coming due immediately. So they've got a lot of flexibility
0:15.6	to deal with a higher rate environment.
0:19.6	I'm Chris Hill and that's John Worth.
0:24.4	Executive Vice President for Research and Investor Outreach for
0:28.3	Nehrete, the National Association of Real Estate Investment
0:32.4	Trust.
0:33.6	Ederwollard and Matt Frankl caught up with Worth to talk about how
0:37.3	REITs are feeling the effects of rising interest rates,
0:40.6	why more of them could be taken private and which sectors are
0:44.4	showing some promise in a challenging environment.
0:52.4	We're long term investors here, but we're reaching the end of
0:54.8	another earnings season.
0:56.5	Was there anything in this quarter that surprised you about
0:59.4	overall REIT performance?
1:01.0	I think I wouldn't necessarily say it's a surprise, but we've seen
1:05.8	this consistent, strong operational performance where
1:09.8	REITs are delivering earnings. So for the second quarter,
1:12.7	REITs had total FFO, which is the REIT measure of earnings,
1:17.4	funds from operation. And they had total FFO over 19 billion
	...

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