It was commented that REITS are over priced becuase interest rates will rise some day..just dont know when.
The REIT overpirced issue is another topic,but The rate issue I want to comment on.
It is alwyas important to put any commnet into perspective and also make it relative.
My opinon and shared by the BMO story enclosed:
Rates are not going to move unitil mid 2013 or even later and at that,not by much. Maybe a 1/4 point at a time and a whole point over a year.
Most REITS ( now) are re-financing into the low rates and improving operating costs. Hence even a double of rates would still be a break even for most reits.
REITs have a clear 12 months to adjust the business and bring distributions up and hence stabilize the yield.
Any REIT with greater than 100% POR )(Today) , is at risk of interest rate competition.Agian still a year away IMHO.