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Donald Trump was just elected president in one of the most dividing elections in recent history. The country has shown its divide, and now will have to grow together, and Trump seems to think that we should start our growth process with our infrastructure.
Whether you believe in his agenda or not, researchers have shown that his new plan will need to take on a massive amount of debt, which will be used to create jobs and rebuild our infrastructure. In doing so, the bond yields will have to rise, and the dividends that REIT's have been offering, all of a sudden aren't looking so great.
Karin Ford, a senior analyst for MUFG Securities, seems to think that REIT managers have a positive outlook because of Trumps development and real estate background. They think, commercial real estate should rise based on higher business confidence, lower tax rates, and Trumps stimulus program. Also, Mitch Wasterlain, Founder of a real estate investment focused company says that historically real estate has done well in high interest rate environments.
With REIT managers and Securities companies having positive sentiment, it sounds like there could be an upside to the real estate market, and with higher job growth due to the stimulus, there will be increased demand for rentals and/or property, and lack of supply will cause rental and/or property rates to go up as well.
According to this news there seems to be a strong positive look toward the real estate market, and especially commercial real estate. On a small scale, when starting a business there must be a capital infusion in order to grow and thrive, and it sounds like that is what Trump is trying this time, but will the execution come across as good as it sounds, or will we be facing an even bigger debt, among much larger problems?
What are your thoughts?
Written By:
- Sanjeev (Sunny) Advani
Source: http://money.cnn.com/2016/11/23/investing/real-estate-reits-donald-trump/
