Reits actually do better when rates rise, but not in Canada

Toronto

REAL estate investment trusts aren't to be avoided as interest rates rise - except in Canada, where lower cash-flow growth and higher leverage make them riskier bets, according to the head of securities at a C$6.5 billion (S$7 billion) real estate fund.

"If you look at the empirical evidence, Reits actually outperform in a rising-rate environment," Corrado Russo, global head of securities at Timbercreek Asset Management Inc, said in a phone interview. "They tend to do better both on a relative and on an absolute basis."