Impact of Interest Rates on REIT Types

Hard Real Estate Investment Reits

John is analyzing various Real Estate Investment Trusts (REITs) for potential investment opportunities as part of his portfolio diversification strategy. He is particularly interested in how different types of REITs respond to interest rate changes. John's research indicates that Equity REITs and Mortgage REITs behave differently under varying economic conditions.

He is especially concerned about interest rate risk, which he understands can significantly impact the performance of REITs. Given this context, he stumbles upon a webinar discussing the implications of rising interest rates on various REIT structures. Specifically, he wants to know which type of REIT is more insulated from interest rate hikes due to its operational structure and revenue generation methods.

Equity REITs are less sensitive to interest rate changes because they primarily generate revenue from property leasing.

Mortgage REITs are less sensitive to interest rate changes as they focus on acquiring and managing property.

Hybrid REITs combine the features of Equity and Mortgage REITs, hence they are equally sensitive to interest rate changes.

Hint

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