The securities market has had an unpleasant tomb this week. Stocks have been sold because the rates The fact of collecting by the Trump administration was much higher than the market feared. Many economists are concerned that they could lead to a trade war that could light a world economic slowdown.
However, there is at least one silver coating throughout the crisis in the market: performance about us Treasure Bonds has declined. The performance of the ten -year note has dropped below 4%, well above 4.75% above 4.75% before the year.
The ten -year rate is a key reference point for the real estate sector. As it falls, the value of commercial real estate tends to increase. He also does Is much cheaper on loan Money to finance new real estate investments and refinance the existing debt. That is why the market crisis could give confidence to real estate investments (Traits) A great impulse.
Then there are three reit at low risk to consider the purchase in the midst of the market crisis.
Real estate income (NYSE: O) has a global diversification Portfolio of commercial real estate (retail, industrial, games and other properties). Her net lease These properties for many of the leading companies in the world. Net leases provide with that very Stable income because the tenants cover all operating costs, including routine maintenance, real estate taxes and building insurance.
Reit pays about 75% of its stable box flow in dividends (current yield of 5.7%). It retains the rest to invest in additional revenue producing properties. Realty Enter also has one of the strongest balance sheets in the sector, giving it an additional flexibility to invest in revenue properties.
Despite their financial strength, higher rates have restricted their ability to collect additional capital of investors to finance jokes. For example, he invested less than $ 3.9 billion last year and initially plans to invest $ 4 billion this year. It is well below its investment level before the increase in rates had a complete effect ($ 6.4 billion by 2021, $ 9.5 billion by 2022 and 9 billion $ 2023). The decrease in ten years should reduce the reit cost capitalAllowing it to increase its investment volume and grow faster.
WP Carey (NYSE: WPC) She also owns a world-diversified real estate portfolio (industrial, warehouse, retail, self-storage and other properties) leased to high quality tenants. The stable cash flow of these leases supports its high -performance dividend (5.9%).
Reit grows this payment by investing in additional properties that generate income. However, “given the uncertainty in the broadest market … especially for the management of interest rates and other macroeconomic factors,” said CEO Jason Fox in the Results Report of the fourth quarter of the Reit, the company offered conservative investment orientations to begin the year. It is planned to invest between $ 1 billion and $ 1.5 billion this year.
The CEO said: “We can finance our investments this year without access to the variable income market, obtained through non-core assets, including the operational properties of self-storage, which should generate significant propagation to our clean lease investments.”
However, with improving interest rates, the reit should be able to collect additional capital at attractive costs. This would allow you to increase your investment volume and grow even faster.
Epr property (NYSE: EPR) It has a portfolio of experiential real estate (cinema rooms, food and play places, attractions and other properties). Her net Rent these properties to companies that operate the experiences. These leases provide it very Stable income to pay for your 7.7%dividend.
Reit estimates that you can self-focus $ 200 million to $ 300 million of new real estate investments this year with post-Divided free cash flow, sales of non-choirs and loans to your credit ease. At this rate, it can grow its cash flow per action by 3% to 4% per annum, while delivered a similar dividend growth rate (its payment has recently increased by 3.5%).
Like most reit, the highest interest rates have increased their capital cost. However, with the fall of rates, EPR properties could take advantage of capital markets to raise additional money to increase their investment rate and grow even faster.
Real estate revenue properties, WP Carey and EPR pay high performance dividends supported by their revenue properties. Reit produce effective enough after paying dividends to grow their portfolios and dividends, though relatively slowly.
However, with the falling rates, these reit could It increases the volume of investments this year and grows even faster. This could allow them to produce higher total returns in the future, which makes them look like compelling dividends to buy in the middle of the current sale of the rate market.
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Matt dilolo It has positions in EPR properties, real estate income and WP Carey. The Motley Fool has positions and recommends real estate income. The Motley Fool recommends EPR properties. The mold’s fool has a Outreach policy.
Has your rates down your wallet? These high-performance dividend actions could benefit from market agitation. was originally published by Motley Fool
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