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Stock Strategist Industry Reports

REITs at Their Peaks?

Long in the tooth, the current real estate cycle keeps going.

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As we get deeper into the current real estate cycle, many investors are wondering if the sector is nearing its peak. Meanwhile, interest-rate expectations are weighing on the sector’s valuations. Higher interest rates would put pressure on growth rates and return expectations. Morningstar analysts think rates will remain historically low for the foreseeable future, but any uptick will have short-term implications on the sector.

To get a better read on the real estate cycle, how a rise in interest rates would affect real estate markets, and the long-term risks to the sector, I sat down with analyst Edward Mui, who covers the sector for Morningstar. Our interview took place on Oct. 31, and his answers have been edited for clarity and length.

Edward Mui does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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