With interest rates poised to rise, some would say that now is not a good time to invest in REITs, but data since 1979 debunk this theory, according to Ben Carlson, money manager. "In four out of the six periods where rates went substantially higher, REITs were actually positive," he writes.
Mike Kirby, co-founder and director of research at Green Street Advisors, does not think the REIT sector is overvalued. REITs are "awfully expensive," he says, but their earnings growth are still expected to be impressive. "[W]e are in the sweet spot in the real-estate cycle."
Investors and other REITs are clearly embracing sustainability, says Marla Thalheimer, director of sustainability with Liberty Property Trust. "Tenants are starting to ask for it, and investors are starting to ask for it," she says.
Neuberger Berman Real Estate Fund, an institutional fund that just opened to retail investors, hopes to beat the market by investing in REITs and other publicly traded real estate securities. Its managers are looking for REITs with access to affordable financing and equity capital. They are also interested in REITs that will invest in discounted, high-yielding commercial properties that banks are looking to sell.