FPI injured in deflationary environments, where real estate demand is decreasing because companies are reducing or bankruptcy. In addition, the real value of their assets diminish. REITs tend to expected results, as employment is declining cash flows and distributions are under pressure.
I'm not really talk about benchmarks as the rate of overnight in Canada. REITs tend to outperform during these periods of time because the demand for real estate sales increases. You also have to worry about the peaks of interest rates long term. In general, if the rate is increasing, then the economy is doing well and inflation is a concern.
What interests us is a board that is driven by macroeconomic shocks. Greece in the event of default on its sovereign debt, or the United Kingdom, which increases the cost of capital for all but real estate and public services tend to be relatively highly indebted to them more at risk than other sectors. sovereign debt restructuring, it would take a huge risk premium at all, especially long rates. The long end of the yield curve is up because people perceive more risk in sovereign debt and demand to relocate their capital at risk, especially for extended periods of time.
REITs have seen their cost of capital and increase dramatically when needed access to cheap capital. Right to this day, there are very few loans in the U.S. so we use a little "here, but not the main source of capital, as it was in the U.S. right now. They were forced to forge new relationships with new donors at a time when credit spreads blow . We have always been contributors to the budget, and most REITs have strong relationships with the group of creditors in this country. In the United States was the main source of finance debt and some financial institutions to adhere to any of these mortgages on its balance sheet. It is true that our model has survived because it is based both in the securitization to finance commercial real estate loans (residential or commercial). This is not the case. When the securitization market has gone, United States United, the loan is virtually limited to the programs or government agencies, bank loans little this year.
When we try to assess the riskiness of investment shows the flow of cash – I do not mind the volatility of stock prices, the risk is a real risk of permanent loss of capital. REITs We value based on its free cash flow, measured by Affo, we measure the risk against the risk of their Affo.
Most investors do not have time to do this type of analysis, so the easiest thing to do is Affo or FFO (funds from operations) and on the basis of winning percentage and Affo FFO. All reports REIT FFO, and is generally defined by calculating standardized RealPac, while relations are not all Affo.
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