Fund manager Q&A: Beaten down REITs look attractive

LOS ANGELES (AP) — Like the rest of the stock market, real estate investment trusts have taken a beating this year and are well off their levels from a year ago.

The threat of a weaker economy has hurt, but REIT investors also have an uncertain outlook for interest rates to worry about.

REITs' sharp fall after a big run-up about two years ago has made them more attractively priced, he says, and helped push dividend yields higher.

Patti believes that interest rate hikes won't hurt REITs as long as the economy remains on firm footing.

Real estate investment trusts are companies that own real estate, like malls, apartment buildings, or commercial buildings.

Rising interest rates also means that other income-generating investments, like bonds, start paying out more and attract investors away from comparatively risky investments like REITs.

The Federal Reserve raised its benchmark interest rate in December for the first time in nearly a decade and signaled the possibility of four more hikes this year.

The outlook for further Fed rate hikes has been clouded in recent weeks by the financial markets' turbulent start to the year amid jitters of a slowing global economy and a slump in crude oil prices.