WASHINGTON, DC—It appears that respondents to a GlobeSt.com pollon future REIT values have not been drinking the Kool-aid, err, Imean listening to conventional wisdom about the REIT industry andhow they are not as interest rate sensitive as widely assumed.

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When we asked why REITs were doing so well this year, despitethe probability that the Federal Reserve Bank would raise rates,the majority, or 52% answered that their currentexcellent run is only temporary. Right now, this group agreed,rates are still relatively low and the Fed is only slowly raisingthem. "But once they reach a certain level, investors will dumptheir REIT stocks as expected."

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Another 27% declared that investors' loveaffair with REITs right now is not about interest rates at all."Investors are waiting for the next equity crash, and REITs are asgood a place as any to ride out the next storm," they agree.

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Only 21% agree with the line of thinking thatis popular in the REIT industry, which is that the economy'sfundamentals are strong and the employment rate is steadilyimproving—which, above all, is what matters for REITs.

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There are valid arguments that each camp can make to back uptheir positions.

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Last year REIT values took a nose-dive around the time theFederal Reserve rather inelegantly announced it would be ending itsquantitative easing program. This year they have recovered nicelyand are routinely outperforming the S&P 500 month after month.REIT advocates will tell you that the market has priced in theexpectation of rising interest rates and still love thesesecurities.

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Math, though, is on the pessimists' side. Rising interest ratessimultaneously make REITs more expensive and other asset classesmore attractive.

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As the saying goes, only time will tell which position was thecorrect one. And that time may be approaching faster than realizedwhen this survey was taken, approximately one month ago.

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May's employment numbers were unexpectedly solid and speculation is growing that the Fed will begin allowing interestrates to rise sooner than expected.

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