By Robbie Whelan | The Wall Street Journal
Do bonds and REITs march to their own beats?
That question was the crux of “Urban Legend: The Myth of REIT Interest Rate Sensitivity,” a report issued late last year by the National Association of Real Estate Investment Trusts. It argued that the sharp decline in REIT stock prices wasn’t so much the result of rising interest rates, but was due mainly to misperceptions by investors.
The timing of the report was crucial. REIT stocks, which typically perform better than the broader stock market, had been trailing the market since May, when statements by the Federal Reserve prompted yields on Treasury bonds, along with other interest rates, to rise. NAREIT’s goal was to convince investors that real-estate stocks shouldn’t be viewed similarly to bonds, which tend to experience price declines when interest rates rise.
