The dark cloud hanging over the US real estate industry may be casting an even longer shadow on REITs, or real estate capital trusts. The Federal Reserve’s sentiment on keeping finance charge rates higher for longer has prolonged elevated home loan rates, which have run rampant and impaired Americans’ ability to buy or own a home.
Janus Henderson Investors Global Real Estate investment mix Manager Gregory Kuhl and Haendel St. Juste, Mizuho Senior Equity Research Analyst for REITs and Homebuilders, sit down with Yahoo money management’s industry Domination to talk about the Fed’s monetary policy and its reverberations felt by REITs and the broader real estate sector.
“We’re pretty optimistic that assuming we are done in terms of Fed rate hikes and higher rates, listed REITs today are priced for the finance charge rate environment that we have, which means they can do well,” Kuhl explains, adding: “It’s not an issue of fundamentals, it’s purely an issue of valuation, which we think we’re getting towards the end of.”
Kuhl and St. Juste weigh in on areas of the real estate sector that show promise, naming a few standout equities from the landscape.
“We point people to sectors where there’s clear demand tailwinds — apartments, healthcare data centers, and equities [with] names with, pricing power, better than average earnings development to alleviate some of those concerns,” St. Juste comments.
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