REIT Watch: Rising Interest Rates Drag U.S. REITs Lower

on Jun 21, 2013

**United States**

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**Dow Jones Equity All REIT Index Falls 4.08 Percent**
U.S. real estate investment trusts took a dive yesterday, June 20, with the Dow Jones Equity All REIT Index (INDEXDJX:REI) closing 4.08 percent lower at 264.12, as investors sold shares of the companies vulnerable to rising interest rates.
“This sector is going to woefully underperform in a rising rate environment,” Jonathan Pong, an analyst at Robert W. Baird & Co. in New York, told Bloomberg in a telephone interview. “History proves that out.”

Ventas, the largest U.S. healthcare real estate investment trust, lost 6.1 percent to $64.3, while Boston properties, the U.S. REIT with the biggest office portfolio, fell 6.5 percent to $100.58. Simon Property Group, the biggest owner of shopping malls, dropped by 4.9 percent to $154.58. “Their relative value is gone,” Craig Guttenplan, CreditSights analyst, said as quoted by Bloomberg. “There’s really not much more room to run for the REIT sector.”

**Carter Validus Acquires Indiana Dialysis Centre**
Carter Validus Mission Critical REIT, a real estate investment trust investing in real estate assets throughout the U.S., announced yesterday that it had acquired Fresenius Medical. The property is a dialysis centre located in Goshen, Indiana and the REIT paid $4.64 million (₤3 million) for it.
Fresenius Medical was constructed in 2010 and is 100 percent occupied by a single tenant.

“We are thrilled to acquire another high quality healthcare asset to our growing portfolio of Mission Critical real estate investments,” said John Carter, chief executive of the real estate investment trust.
**Lotte Shopping – First South Korean REIT to List in Singapore**
!m[Lotte Shopping to Launch First South Korean REIT on Singapore Exchange](/uploads/story/3303/thumbs/pic_1_inline.jpg)

Lotte Shopping is about to launch the first South Korean real estate investment trust on the Singapore Exchange as early as this year. The REIT will try to raise between $800 million and $1 billion (₤518-₤647 million) through its IPO.
DBS, Nomura, Standard Chartered and Goldman Sachs have been hired to advise the company on the IPO. The REIT will be listed in Singapore because the state-city’s exchange is viewed as a more liquid market than Seoul.
**H&R REIT Closes $175 Million Debt Sale**
H&R REIT, a real estate investment trust with a portfolio of properties worth about $13 billion (₤8.42 billion), announced yesterday that it had completed the offering of $175 million (₤113 million) principal amount of 3.344 percent debentures due June 20, 2018. H&R has sold the debentures to a syndicate of underwriters co-led by CIBC and RBC Capital Markets. The REIT will use the proceeds to repay debt, enabling it to have greater financial capacity to pursue future acquisitions.
**The Dow Jones Equity All REIT Index was 2.44 points or 0.92 percent lower at 266.56 as of 21.06.2013, 14.35 BST.**
**Lotte Shopping’s share price was 355,000 Korean won as of 21.06.2013, 14.37 BST.**
**H&R REIT’s share price was C$21.11 as of 21.06.2013, 14.37 BST.**


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