Why REIT Cap Rates Change Slowly

Feb. 08, 2022 6:30 AM ET, , , , , , , , , , , , , , , , , , , , , , , , , , 8 Comments

Summary

  • Investors are wondering whether inflation will torpedo the value of their REITs.
  • Part of the answer relates to how property Cap Rates will change with inflation.
  • From the standpoint of both history and theory, I explore that here.
  • I do much more than just articles at High Yield Landlord: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Concept image of Business Acronym REIT as Real Estate Investment Trust. 3d rendering

Kwarkot/iStock via Getty Images

Much discussion relating to REITs revolves around the “Cap Rate” of properties purchased or sold. One is now seeing comments and questions from investors wondering whether inflation will cause property values to plummet and cap rates to soar.

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This article was written by

6.42K Followers

R Paul Drake spent decades developing data-driven models in his work as a physicist, and now brings the perspective of a retiree to his investing and writing. He is a life-long reader of economics, finance, and investing, and embraces value investing.

Paul is one of the analysts at the investing group High Yield Landlord, one of the largest real estate investment communities on Seeking Alpha, with thousands of members. It offers exclusive research on the global REIT sector, multiple real money portfolios, an active chat room, and direct access to the analysts.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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