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NEW YORK (TheStreet) -- The real estate investment trust sector has had a rough and volatile year, and TheStreet's Brad Thomas was with Keven Lindermann, director at SNL Financial, to discuss it.

The potential for rising interest rates has weighed heavily on the REIT sector, Lindermann said.

He added that with rates being so low, there's only one direction they can go when it finally comes time for them to move: Up.

That presents a problem for REITs, which are only up 4% in 2013, compared with the

S&P 500's

22% rally.

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Lindermann said that higher interest rates will make doing business more expensive and make other fixed-income assets look more attractive.

However, while the threat of rising rates remains, he suggested that REITs are in the normal range of being fairly valued, with broad-based REITs trading at a 7% discount to net asset value (NAV).

More specifically, Lindermann said the health care and self-storage REIT sectors are trading near an 18% premium, while the regional mall and multi-family sectors are trading near a 15% discount.

He concluded that the broader REIT sector is near fair valuation, and those that are deeply discounted such as regional malls and multi-family sectors might start to see more interest from investors.

-- Written by Bret Kenwell in Petoskey, Mich.

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.