04-10-2015, 07:47 PM
Property REITs generally have lots of various financing, some fixed rate and some adjustable. Maturity dates vary as well, with most not going out much beyond 5 years. As debt has to be rolled over, higher rates for the new term will bite into margins. 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.
For MREITS short term borrowings are constantly having to be rolled over. That plus degree of leverage makes them particularly vulnerable. As you point out, much more risky than property REITs.
For MREITS short term borrowings are constantly having to be rolled over. That plus degree of leverage makes them particularly vulnerable. As you point out, much more risky than property REITs.
Alex