One type of investment that’s typically shunned in a rising interest rate environment is real estate investment trusts, or REITs. That’s because higher rates mean higher borrowing costs — literally the price of doing business for REITs — which can weigh on returns for investors. Also, as rates move higher, lower-risk fixed-income investments, including Treasuries, become attractive again. But not all REITs are created equal. Many can withstand the higher rates because the rising rates usually accompany an improving economy, which in turn is good for business. And lest you think real estate is only condos and office buildings, say… Read More
One type of investment that’s typically shunned in a rising interest rate environment is real estate investment trusts, or REITs. That’s because higher rates mean higher borrowing costs — literally the price of doing business for REITs — which can weigh on returns for investors. Also, as rates move higher, lower-risk fixed-income investments, including Treasuries, become attractive again. But not all REITs are created equal. Many can withstand the higher rates because the rising rates usually accompany an improving economy, which in turn is good for business. And lest you think real estate is only condos and office buildings, say hello to Crown Castle International Corp. (NYSE: CCI), the largest provider of shared wireless infrastructure in the United States. Crown Castle is dominant in a sector where barriers to entry are high and the threat of excessive supply is minimal. It’s also in a position to improve its business standing because demand for its properties is growing. And the good news for investors is that Crown Castle recently committed to increase its dividend — good news in any kind of market, but especially in this dividend-starved one. And because it’s a REIT, which means it has to distribute at least… Read More