A few years ago, reits were the “in” thing to invest for yield. Some of the reits were giving 10% in annual dividend payout. They also promised to pay 90% of the profit generated yearly. Everything is fine when interest rate is at a 30 year low, i.e. 1%.
What will happen if interest rate spike suddenly? As their loan repayment go up, the profit will be much less. The reduced profit will reduce their dividend payout and share price will fall. I wonder if reits holders are aware of the risk they took.
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