Real estate question; book5, reading 31, pg 15

CFA Level III
#1

It says - mortgage REITs lend money to builders and make loan collections. Shareholders receive interest income and capital appreciation income from improvement in the prices of loan".

Please explain on how mortgage REITs will have capital appreciation income from improvement in the prices of loan? A loan is a loan, and why will there be improvement in the price of it… and therefore derive capital appreciation.

TY.

#2

mortgage REITS are more than 75% mortgage the rest is real estate investment

so you get both

#3

If interest rates drop, the value of the loan rises, just as the value of a bond rises.

#4

so many different answers.

also :

loan are assets backed securities. if property price goes up, risk goes down, price goes up( because interest rate goes down )