04-11-2015, 10:26 AM
(04-10-2015, 07:47 PM)hendi_alex Wrote: Be sure to look at the specific borrowing details for each REIT that is held. Some will have a pretty good buffer to rising rates, others will have a lot of near term maturities, therefore will be more vulnerable to rate increases.
Take Realty Income (O) as an example. It has the following debts according to the 2014 10-K:
$223M credit facility
$836M mortgages
$70M term loan
$3.8B unsecured notes and bonds; maturity dates range from 2015 to 2035
Offsetting the various maturities are lease expirations that occur every year through 2043. As the leases expire, O has the opportunity to offset possible increased debt expenses with increased lease income.
Anyone who is interested in an equity REIT should read the 10-K for this type of information.
When is this supposed increase in interest rates going to happen? Folks have been calling for it for years, and missing investment opportunities out of fear. So far, every prediction has been wrong. Short rates are still close to zero and 10 year rates are persistently close to all time lows. The SNB is now charging negative deposit rates. If this is any indication, rising rates are far away.