JULY 15, 2013

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Rising interest rates impact on REIT market in second quarter

by Sara Kassabian

The REIT market underperformed the broader equity market in the second quarter, with the NAREIT All Equity REIT Index posting negative returns of –2.13 percent while the S&P 500 Index returned 2.91 percent, according to the FTSE NAREIT U.S. REIT Index.

Michael Torres, principal and CEO of Adelante Capital Management, attributes the lower returns to rising interest rates.

“The rising interest rates have put downward pressure on REITs,” Torres says. He notes that the REIT market was not hit as hard as some comparative equity markets that were also impacted by rising interest rates.

Robin Ziegler, director and real estate product manager at Invesco Real Estate, shared similar observations. “Going forward, investors appear to be carefully watching for indications of future changes in the Federal Reserve’s quantitat

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