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Index IDEA: Rising rates and real estate

Real estate securities in the Residential, Office, Retail and Industrial sectors may stand to benefit with US interest rates on the rise, says new research from global index provider FTSE Russell and the Nareit.

Since March 2006, the FTSE Nareit RORI REITs Index has recorded a +0.37% average total return on days when the 10-year US Treasury yield was increasing compared to a -0.29% average total return on days when the 10-year US Treasury yield was declining.

Source: FTSE Russell and Nareit, data from March 20, 2006 through October 16, 2018. Past performance is no guarantee of future results. One cannot invest in an index. Returns shown are hypothetical pre-inception returns (the Index was launched on October 16, 2018). Please see the end for important disclosures.

Brad Case – SVP, research & industry information, Nareit:

“Rising interest rates in the US tend to go hand-in-hand with overall improving macro market conditions. It is these same improving macro market conditions that tend to cause improvements in occupancy, rent growth and net operating income for real estate securities, which is reflected in stronger long-term performance for the RORI sector.”

Catherine Yoshimoto – director, index product development, FTSE Russell:

“The FTSE Nareit RORI REITs Index is an effective tool for investors who wish to measure and track the performance of listed real estate securities that are focused on the Residential, Office, Retail and Industrial property sectors. The Index is part of the FTSE Nareit US Real Estate Index Series, a comprehensive family of REIT-focused indexes that provide broad exposure to the US commercial real estate industry.”

The FTSE Nareit RORI REITs Index is designed to track and benchmark the Residential, Office, Retail and Industrial (RORI) sectors of the US-listed REIT market. For more information on the FTSE Nareit US Real Estate Indexes, go to the FTSE Russell website.

 

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Past performance is no guarantee of future results. Charts and graphs are provided for illustrative purposes only. Index returns shown may not represent the results of the actual trading of investable assets. Certain returns shown may reflect back-tested performance. All performance presented prior to the index inception date is back-tested performance. Back-tested performance is not actual performance, but is hypothetical. The back-test calculations are based on the same methodology that was in effect when the index was officially launched. However, back- tested data may reflect the application of the index methodology with the benefit of hindsight, and the historic calculations of an index may change from month to month based on revisions to the underlying economic data used in the calculation of the index.

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Views expressed by Brad Case of Nareit and Catherine Yoshimoto of FTSE Russell are as of October 25, 2018 and do not necessarily reflect the views of London Stock Exchange Group or FTSE Russell.

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