... . Finally, there are those MREITs that focus specifically on Commercial Real Estate and Commercial Mortgage Backed Securities (MBS), those that focus on Residential Mortgage Backed Securities (RMBS) and those that do a combination of CMBS and RMBS. In short, there is no easy way to evaluate the MREIT segment. It requires looking at each MREIT individually and determining whether its specific characteristics meet your investment goals and tolerance for risk. It is probably for this reason and degree of difficulty, that many folks (including brokers and investment advisers) steer clear of MREITS, and it is for the same reason that they offer ... that they hold in their portfolio. Their potential for profit is the difference between the short term interest rates they pay to borrow money to obtain the mortgages, and the long term interest rates of the mortgages or MBS themselves. This brings us to the single most critical factor in MREIT performance other than the ability of the management team...that is the interest rate environment. Recently with the FED holding short term rates at historic lows, the environment has been ideal for all kinds of MREITs, but what will happen when short term interest rates begin to rise? This in ...
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