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NEW YORK CITY-“Expectations that the Federal Reserve could end its quantitative-easing programs amid a strengthening US economy have made yield-oriented equity investments such as REITs relatively less attractive” is how Bloomberg recently summed up the decline in REIT stock prices since late May. Last week, the Bloomberg REIT Index fell 4.2% on fears of rising interest rates and news that the Federal Reserve would probably start winding down its third round of QE sometime this year. While acknowledging that “real estate is interest-rate sensitive,” Nicholas Schorsch, American Realty Capital‘s chairman and CEO, thinks the fears are overblown.

“When you look at the interest rates, they’re up about 60 basis points on the 10-year Treasury and about 50 bps on the five-year,” Schorsch tells GlobeSt.com. That being said, he adds, “we’re still at an all-time interest rate low.” A too-steep rise in rates “could derail housing and slow economic growth. The Fed doesn’t want that. So we believe this is just an overreaction.”

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