Hello, moomooers. On September 19th, the Federal Reserve will announce an interest rate cut policy, which is undoubtedly a significant boost for REITs that rely heavily on credit operations.
Many friends are not familiar with REITs. Let's make a simple analogy. REITs are like a big landlord who borrows from banks to purchase properties (such as shopping malls, office buildings, factories, etc.) and then leases them to earn rental income. Therefore, REITs are very sensitive to bank interest rates, which are closely related to the company's profit margin.
Since the Federal Reserve began raising interest rates continuously in March 2022, reaching a peak of about 5.5%, it has not only attracted global capital, but also significantly increased the operational difficulties for REITs. In addition, during the global pandemic, countless small, medium, and large enterprises have suspended operations, reduced business scale, laid off employees, and implemented work-from-home policies. As a result, business owners have had to reduce their demand for office spaces, factories, warehouses, and other properties. The demand for property leasing has continuously declined, dealing a fatal blow to REITs. I believe everyone can intuitively understand this by examining the candlestick charts of major REITs over the past three years.
Against this backdrop, the Federal Reserve has been signaling interest rate cuts this year, seemingly reviving the spring for REITs. $REITs (LIST3047.SG)$
$ManulifeReit USD (BTOU.SG)$
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