"The urban myth is that there's a lock-step correlation between rising rates and REIT performance," says NAREIT economist Michael Grupe. "REITs are clearly not [bonds]."
Pointing to 16 periods since 1995 when rates rose sharply, but REITs performed well, Grupe says the sector's troubles since last spring is an overreaction to uncertainty.
Green Street Advisors' Mike Kirby takes the other side of the argument, calling REITs hybrid securities that behave like stocks sometimes and bonds at others. "History shows that when rates spike, REITs fare poorly."