{"id":5629,"date":"2023-10-26T12:18:05","date_gmt":"2023-10-26T12:18:05","guid":{"rendered":"https:\/\/infundpros.com\/news\/5-reits-with-no-near-term-debt-maturities-and-virtually-no-floating-rate-debt\/"},"modified":"2023-10-26T12:18:07","modified_gmt":"2023-10-26T12:18:07","slug":"5-reits-with-no-near-term-debt-maturities-and-virtually-no-floating-rate-debt","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=5629","title":{"rendered":"5 REITs With No Near-Term Debt Maturities And Virtually No Floating Rate Debt"},"content":{"rendered":"
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You may have heard the term “fortress balance sheet” before.<\/p>\n

Just a few years ago, every real estate investment trust (“REIT”) effectively had a fortress balance sheet, because interest rates were so low it didn’t really matter whether your interest rate on borrowings was 4% or sub-2%. Either way, interest costs were low. Debt levels were almost a non-factor.<\/span><\/p>\n

Today, a lot fewer REITs have truly “fortress” balance sheets, because interest rates are no longer at ultra-low levels.<\/p>\n

Put differently, having a fortress balance sheet actually matters today where it didn’t so much during the ultra-low interest rate period.<\/p>\n

Even so, as Treasury yields spike, the entire REIT sector has sold off heavily, much more so than the other traditional dividend-paying sector of utilities.<\/p>\n

You can see in this chart that the Vanguard Real Estate ETF (<\/span>VNQ) has collapsed by nearly 40% since its peak in early 2022, while the Utilities Select Sector SPDR ETF (<\/span>XLU) is down only 17.5%.<\/span><\/p>\n

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Data by YCharts<\/figcaption><\/figure>\n<\/p>\n

There are some REITs with truly fortress balance sheets that have been tossed out with the bathwater along with the rest of the real estate sector.<\/p>\n

This makes sense only if REITs are nothing more than bond proxies, but REITs are much more than bond proxies!<\/p>\n