Last year when the ten-year Treasury rate hit 350, many peoplein the market were convinced that the ten-year would stay above 3%for the foreseeable future. But then the Treasury rate dropped andnet lease REIT Store Capital felt compelled to make a move. So itdid a Treasury lock at 290 in order to issue debt. “We were happywith where ten-year was and we were happy issuing debt at thatspread,” Chris Volk, president and CEO of the company, says. “So welocked in. Of course, as it turned out, we lost money on the lock.”Because with impeccable timing, the Treasury promptly dropped to240 after STORE Capital'slock.

It's all good, though, Volk says. “We managed to borrow money alittle cheaper than we would have” and that somewhat offset theloss. At any rate STORE Capital, as well as any other REIT morethan one day old, knows it is more important to set and adhere toan overarching business and investment strategy than to make majordecisions based on interest rates. A long period of stable interestrate policy-making still tends to be of shorter duration than, say,a REIT's five-year strategic plan.