How U.S. Federal Reserve policy could affect REIT stocks
A heightened interest rate environment has brought some weakness to the real estate stocks, but a pause in central bank tightening could cause real estate investment trusts (REITs) to rebound, one analyst says.
Speaking with BNN Bloomberg’s Andrew Bell on Wednesday, Uma Moriarity, investment strategy analyst and environmental, social and governance (ESG) lead at CenterSquare Investment Management, said a continued pause in the U.S. Federal Reserve interest rate hikes would be favourable for the real estate sector in the public markets.
“Something we saw play out in 2022, as we saw rates starting increase, was that real estate, given the asset class being more sensitive to interest rates, really pulled back in the public markets — as the public markets really discontented the impacts of the rising rates,” she said.
“So going into the other side of the equation, where we’re hoping to see the U.S. Fed to kind of stop from a rate hiking perspective, it makes sense that REIT’s would somewhat reverse that performance.”
She recommended Equity Residential (EQR), First Industrial Realty Trust, Inc. (FR), Healthpeak Properties Inc. (PEAK) and Digital Realty Trust (DLR) as her top REIT picks.
The U.S. Federal Reserve’s next moves are uncertain. The central bank kept interest rates unchanged last week and held rates at 5.1 per cent, but its top officials have signalled the possibility of more hikes to come this year in a continued battle to bring down high inflation.
Moriarity, her family, her firm and her investment banking clients do not own any shares mentioned above.
Check out the full video at the top of the article to learn more.
Speaking with BNN Bloomberg’s Andrew Bell on Wednesday, Uma Moriarity, investment strategy analyst and environmental, social and governance (ESG) lead at CenterSquare Investment Management, said a continued pause in the U.S. Federal Reserve interest rate hikes would be favourable for the real estate sector in the public markets.
“Something we saw play out in 2022, as we saw rates starting increase, was that real estate, given the asset class being more sensitive to interest rates, really pulled back in the public markets — as the public markets really discontented the impacts of the rising rates,” she said.
“So going into the other side of the equation, where we’re hoping to see the U.S. Fed to kind of stop from a rate hiking perspective, it makes sense that REIT’s would somewhat reverse that performance.”
She recommended Equity Residential (EQR), First Industrial Realty Trust, Inc. (FR), Healthpeak Properties Inc. (PEAK) and Digital Realty Trust (DLR) as her top REIT picks.
The U.S. Federal Reserve’s next moves are uncertain. The central bank kept interest rates unchanged last week and held rates at 5.1 per cent, but its top officials have signalled the possibility of more hikes to come this year in a continued battle to bring down high inflation.
Moriarity, her family, her firm and her investment banking clients do not own any shares mentioned above.
Check out the full video at the top of the article to learn more.
