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Quarter-End Insights

Real Estate: Malls and Hotels Have the Most 4- and 5-Star Names

Overall, sector remains fairly valued and sensitive to interest rates.

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The Morningstar US Real Estate Index rose 27% over the trailing 12 months (Exhibit 1) and is underperforming the broader U.S. equity market by 4% as economic concerns have slightly waned in the fourth quarter. REITs are defensive in nature because of their long-term leases with tenants and high dividend payouts, making them less attractive to investors when economic conditions improve.

Real estate is up but has underperformed the U.S. equity index. - source: Morningstar

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