Monthly Archives: August 2013

Understanding the Three Rs: REITs and Rising Interest Rates

When the Federal Reserve suggested in June that they may consider tapering their massive, monthly bond buying program sooner than expected, market investors interpreted their optimism as a sign that interest rates would likely be rising in the short-term. As weeks passed, investors came to the realization that this is not the case as economic growth and unemployment remain well below Fed target levels. However, the damage in the REIT sector was already done as REITs, as measured by the Dow Jones (DJ) Equity All REIT index, experienced a total return of -2.1% for the quarter – the weakest quarterly return for the index since the third quarter of 2011. The DJ Equity All REIT index components include publicly traded companies in the S&P Dow Jones Indices U.S. stock universe that have elected to be taxed as REITs and are classified as Equity REITs according to the Dow Jones REIT Industry Classification Hierarchy.Read more