US Reits to perform well despite rising rates: Cohen & Steers

New York

A GROWING economy and rising employment should help real estate investment trusts (Reits) stave off the cold they typically catch when US interest rates head higher, Cohen & Steers, a pioneer in Reit investing, said on Thursday.

Reits peaked last summer when more investors began to accept the notion that the US recovery was strong enough to sustain a rate hike, and yields on benchmark US Treasuries bottomed. Investors believed that valuations could not improve in a rising interest rate environment, said Jon Cheigh, at global portfolio manager at Cohen & Steers, the largest active manager of Reits. "The story that Reits are about rates is misleading," he said on Thursday. "Interest rates are the dominant story for how these stocks behave rather than the prospects for the economy." Rising rates indicate a more sustainable economy that should boost demand for office space as employment expands, …