REITs have generally performed poorly in 2015 primarily due to the fear of higher interest rates ahead. Ethan Penner, managing director of Mosaic Real Estate Investors, said the impact of a Federal Reserve rate hike on real estate has been profoundly overstated. ‘This whole hullabaloo about a 25 basis point increase on Fed Funds is really a non-event,’ said Penner. ‘And I think it will have very little impact on anything including real estate.’ As for his favorite area within real estate right now, Penner said he prefers the residential area, as well as properties that are ‘less tied to economic vibrancy.’ ‘I don’t see the global economy taking off and so I wouldn’t be as sanguine about things like office buildings in CBD (Central Business District) areas,’ said Penner. ‘I would not be as sanguine about high end malls.’ Regarding liquidity concerns and real estate investing, Penner said it is often misunderstood and made out to be a bigger problem than it actually is. He said equity investors are often forced to take bigger discounts when scrambling for cash in a downturn than real estate investors.
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