Revenue growth for U.S. REITs is likely to slow over the next two years because of inflation and rising interest rates, say Standard & Poor’s Financial Services LLC analysts.
Michael Souers, director at S&P and a lead analyst in the real estate sector, said while he expects REIT performance to slow a bit, S&P is still forecasting positive growth for the sector. If a recession does take hold, which S&P’s economist recently gave a 30% chance of happening within the next year, how REITs performed during the global financial crisis of the late 2000s may give clues about what’s ahead.
Most REITs posted single-digit percentage slowdown in 2007 and 2008, Souers said, with office-heavy REITs the most impacted. Because of the Covid-19 pandemic, which shook up all commercial real estate sectors to some extent, it’s possible REITs are actually better positioned to withstand a downturn now, because tenant quality has likely improved since the pandemic in sectors like office and retail.
*Article courtesy of Philadelphia Business Journal
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