jonya
It is clear that falling interest rates provide a boost for REITs, which are inherently duration loaded assets that respond very well to either falling or increasing cost of financing levels.
The primary reason why REITs are so sensitive to
2 REITs With Asymmetric Payoff And Juicy Dividends
Summary
- In the falling interest rate environment, duration-loaded assets thrive.
- Since REITs enjoy predictable cash flows from long-term agreements, they are quite sensitive to interest rate changes just as bonds.
- Historical examples, like the Austrian century bond, illustrate the impact of shifting monetary policies on such assets.
- In this article, I elaborate on two REITs I own that, in my opinion, provide favorable asymmetric payoffs, where the upside is driven by the interest rate stimulus.
Roberts Berzins has over a decade of experience in the financial management helping top-tier corporates shape their financial strategies and execute large-scale financings. He has also made significant efforts to institutionalize REIT framework in Latvia to boost the liquidity of pan-Baltic capital markets. Other policy-level work includes the development of national SOE financing guidelines and framework for channeling private capital into affordable housing stock. Roberts is a CFA Charterholder, ESG investing certificate holder, has had an internship in Chicago board of trade (albeit, being resident and living in Latvia), and is actively involved in "thought-leadership" activities to support the development of pan-Baltic capital markets.
Analyst’s Disclosure:I/we have a beneficial long position in the shares of O, GMRE either through stock ownership, options, or other derivatives. 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.