What Will Happen To REITs In A Recession?

Group 1 - The article discusses the potential impact of an upcoming recession on Real Estate Investment Trusts (REITs), suggesting that most REITs may actually benefit from a recession due to their structural resilience [2][10] - REITs are characterized as recession-resistant because they typically earn cash flow from long-term leases and maintain low debt levels, making them less vulnerable to economic downturns [3][5] - Historical data indicates that REITs have outperformed the broader stock market during recessions, generating positive returns in late cycles and only experiencing slight declines during downturns [7][9] Group 2 - Current valuations of REITs are already discounted, trading at their lowest levels in over a decade relative to the broader market, primarily due to rising interest rates [10][12] - The expectation is that a recession will lead to interest rate cuts, which would alleviate the current fears surrounding high interest rates and positively impact REIT valuations [14] - The article concludes that a minor GDP decline is unlikely to cause significant drops in REIT share prices; instead, it may trigger a rally as the market narrative shifts positively towards REITs [15][16]