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They offer high yields because they're required to pay out most of their income in dividends to investors.The problem with REITs in a rising interest rate environment is that the underlying real estate holders will have to pay higher interest rates on their mortgage loans. When real estate companies are paying higher interest rates to borrow money, then there's less left to pay out to investors.There's an inverse relationship between REIT prices and interest rates: When interest rates go up, the value of REIT funds tends to drop..
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