... 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 itself is not as easy a question as it may seem, because again, not all MREITs hold the same type of mortgages. Some are long term fixed, and some are adjustable rate mortgages (ARMs). Obviously, there will be a significant difference in the impact of rising ... willing to put in the time to determine which ones are right for them and their investment criteria. So, what will happen when the FED begins to increase interest rates again? When it becomes apparent that interest rate increases are imminent, there will be a rush to the MREIT exits as the herd mentality will paint all MREITs with one brush, and determine that any rise in interest rates will be bad for all MREITs. The fact is that interest rate increases are much worse for some than others, depending on their amount of leverage, hedging, and mortgage terms (fixed vs. ARMs). Some will ...
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