Unless you have been living under a rock, you should be aware that the days of low interest rates are well and truly over – in 2022 alone, the Federal Reserve have announced a total of 7 interest rate hikes (by 0.25% in March, 0.50% in May, and by 0.75% in June, July, September, November, and December), bringing the Federal Funds to 4.25% to 4.50% at the end of the year (from 0% to 0.25% before the rate hikes started.) – statistics taken from Forbes here.
With REITs needing to pay out 90% of its earnings as distributions to unitholders (in layman terms, it is basically dividends to shareholders, but in REITs, it is referred to as such), whenever they need to embark on acquisitions, they will need to take on bank loans to fund for them.
However, with interest rates at high levels now (and in my opinion, it likely to remain at such levels at least over the next year or two before there are any chances of it coming down), how will REITs be impacted?
In the 4th part of this ‘Ready to REITire’ video series done in collaboration with The Joyful Investors, Hazelle and myself will be sharing our thoughts on this, along with why is it still good to invest in REITs at this point in time:
** if you are unable to watch the video above, you can click here to watch it on YouTube.
If you have any questions, or require any clarifications, do feel free to reach out to me here.
You can also send any questions you may have to The Joyful Investors via the following channels: Telegram, Facebook, and Instagram.
Finally, for those of you who have missed out on the previous 3 videos, you can find them via the respective links below:
Video #1 – where we shared on what REITs are, advantages of investing in one, along with its limitations;
Video #2 – 3 criteria we look at when it comes to selecting REITs to add to our investment portfolio;
Video #3 – 3 ‘red flags’ to make sure the REITs you have selected are free of (this will significantly reduce the likelihood of you making a bad investment decision.)
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