Tags: reits | fed | rate | jobs

REITs Fall as Jobs Report Boosts Odds of Interest-Rate Increase

Image: REITs Fall as Jobs Report Boosts Odds of Interest-Rate Increase
(Dollar Photo Club)

Friday, 06 Nov 2015 01:15 PM

Shares of real estate investment trusts fell the most since August after an upbeat reading on U.S. jobs increased the odds the Federal Reserve will raise interest rates this year.

Companies that own properties such as luxury hotels, office towers and shopping malls are being whipsawed as investors wager on when the central bank will raise its benchmark lending rate for the first time in nine years. Higher interest rates may be a drag on property values and make it more expensive for REITs to raise money.

“The market knew the Fed would eventually raise rates and the REIT party would be more sober,” said John Kim, an analyst at BMO Capital Markets Corp. in New York. “Declining interest rates have been a huge tailwind to asset and REIT prices in recent years -- going forward they will be a headwind.”

Employment in October surged by the most this year, wage growth accelerated and the jobless rate fell to a seven-year low of 5 percent, pushing up the odds for a rate increase at next month’s Fed policy meeting.

The Bloomberg REIT Index was down 3.1 percent at 12:33 p.m. in New York, the most since a 4.7 percent drop on Aug. 24. The biggest loser was prison operator Geo Group Inc., with a 6.1 percent decline. Health-care landlord Ventas Inc. fell 5.9 percent, and senior-housing owner Welltower Inc. slid 5.8 percent.


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Shares of real estate investment trusts fell the most since August after an upbeat reading on U.S. jobs increased the odds the Federal Reserve will raise interest rates this year.Companies that own properties such as luxury hotels, office towers and shopping malls are being...
reits, fed, rate, jobs
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2015-15-06
Friday, 06 Nov 2015 01:15 PM
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