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OUR COMPANY AND AFFILIATES
CBRE GLOBAL INVESTORS

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers providing real estate and infrastructure investment solutions to over 500 clients worldwide.

CBRE GROUP

CBRE Global Investors is the investment management division of CBRE Group, Inc. the world’s premier commercial real estate services and investment firm.  The company’s shares trade on the New York Stock Exchange under the symbol “CBRE.”

REAL ESTATE SERVICES
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REITS IN A RISING RATE ENVIRONMENT

Q1 2018
KEY TAKEAWAYS:
  • Economic growth tends to trump rising rates in relation to REITs providing a potential performance tailwind.
  • REITs have generated positive returns following acute periods of interestrate fear driven selling.
  • We believe REITs currently representan attractive buying opportunity for investors looking to increase their income and total return potential.
Economic Growth and Inflation are Tailwinds During Periods of Rising Interest Rates

In an environment where interest rates are increasing as a result of improvingeconomic vitality, listed REIT fundamentals may improve due to an increase in demandfor commercial real estate. This increased demand level would likely lead to risingrevenues, earnings, and dividends for owners of commercial real estate.REIT investors have benefited and generated positive returns in market environmentswhen REITs’ fundamentals and the economy were picking up. When the Fed hasincreased rates three or more times in a year, REITs have generally outperformedboth equities and bonds (Exhibit 1). The exceptions are 1999 and 2017, bothmarket environments where investors favored higher growth equity stocks over higheryielding REITs. We believe REITs currently represent an attractive buying opportunityfor investors looking to increase their income and total return potential.

EXHIBIT 1: U.S. REIT PERFORMANCE VERSUS U.S. EQUITIES AND U.S. BONDS
REITs Have Generally Delivered Positive Performance When The Fed Funds Rate Has Increased

Source: CBRE Clarion as of December 2017. U.S. REITs: FTSE NAREIT Equity REIT Index, U.S. Equities: Russell 3000Index, U.S. Bonds: Citigroup Treasury 10+ Years Index. Information is the opinion of CBRE Clarion, is subject to changeand is not intended to be a forecast of future events, or a guarantee of future results, or investment advice. Forecasts andany factors discussed are not indicative of future investment performance.

REITs Have Presented Buying Opportunities After Periods of Rising Interest Rates

Although REIT stocks can be volatile in the short term when sharp upward moves in rates, they tend to shine in the longer termas the economy grows, despite the higher rates.In fact, a short-term pullback due to rising bond yields usually represents abuying opportunity.

REITs have historically underperformed equities during acute periods of rising interest rate fears. However, post this sell-offperiod, REITs have generally outperformed equities over the next 12 months (Exhibit 2).

EXHIBIT 2: U.S. REIT RETURNS DURING AND AFTER PERIODS OF RISING INTEREST RATES
REITs Have Historically Outperformed the Broader Equity Market Following Interest Rate Driven Corrections
1FTSE NAREIT Equity REIT Index
Source: FactSet, S&P 500 Index and FTSE NAREIT Equity REIT Index, 10-Year Treasury as of February 28, 2018. An index is unmanaged and not available for direct investment. Past performance is no guarantee of future results.
REITs are Well Positioned for Growth

REIT valuations are attractive versusfixed income as well as relative to the estimated private market value of the underlyingreal estate. Company earnings are steadily growing globally, supported by the long-term contractual nature of underlyingtenant leases. And the level of new commercial real estate supply remains below its long-term average; enhancing landlordpricing power.

Our research shows that the impact of rising revenue and operating profits in times of economicexpansion is more important to REITs’ value (and stock prices) than the impact of higher rates.Economic growth tends to trump rising rates in relation to the performance of REIT shares.
IMPORTANT DISCLOSURES

Standard & Poor’s 500 Indexis an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

FTSE NAREIT Equity Indexis an unmanaged market cap weighted index comprised of 151 equity REITs. The NAREIT Equity index is available daily. The NAREIT Equity index includes healthcare and net leaseREITs, but excludes real estate operating companies. The requirement for inclusion in this index is for a company to be an exchange listed equity REIT. There is no minimum size or liquidity requirement for anequity REIT to be included in this index.

Citigroup Treasury 10+ Years Indexcomputes returns for the 10-year on-the-run Treasury that has been in existence for the entire month.Russell 3000 IndexA market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of the entire U.S. stock market.©2018 CBRE Clarion Securities LLC. All rights reserved. The views expressed represent the opinions of CBRE Clarion which are subject to change and are not intended as a forecast or guarantee of future results.Stated information is provided for informational purposes only, and should not be perceived as investment advice or a recommendation for any security. It is derived from proprietary and non-proprietary sourceswhich have not been independently verified for accuracy or completeness. While CBRE Clarion believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness,accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and management’s view as of the time of thesestatements. Accordingly, such statements are inherently speculative as they are based on assumptions which may involve known and unknown risks and uncertainties. Actual results, performance or events maydiffer materially from those expressed or implied in such statements.

Past performance of various investment strategies, sectors, vehicles and indices are not indicative of future results. Investing in real estate securities involves risk including to potential loss of principal. Real estateequities are subject to risks similar to those associated with the direct ownership of real estate. Portfolios concentrated inreal estate securities may experience price volatility and other risks associated with non-diversification. While equities may offer the potential for greater long-term growth than some debt securities, they generally have higher volatility. International investments may involve risk of capital loss fromunfavorablefluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. There is no guarantee that risk can be managedsuccessfully. There are no assurances performance will match or outperform any particular benchmark. Indices are unmanaged andnot available for direct investment. PA02202018