Real estate stocks could continue their rally if the Fed makes its first interest rate cut in four years, but the size of the rate cut is crucial, says a portfolio manager.

“The market will react more positively to a larger cut and we could see a larger rise in real estate stocks than with a 25 basis point rate cut,” said Todd Kellenberger, REIT client portfolio manager at Principal Asset Management, in an email to Yahoo Finance.

Before the Fed announced its monetary policy decision, investors estimated the probability of a 50-point cut at 59 percent, according to the CME’s FedWatch tool.

The Real Estate Select Sector SPDR Fund (XLRE), whose largest holdings include REITs such as Prologis (PLD) and American Tower (AMT), is up 17% this quarter. It’s a surprising turnaround from the beginning of the year when the sector suffered from increased borrowing costs. Mortgage rates have since fallen.

Kellenberger remains optimistic about the REIT landscape as the path forward for the Fed’s plan becomes even clearer.

“We believe it is more important to monitor the Fed’s commitment to future rate cuts,” Kellenberger added. “A strong commitment to future rate cuts will be important to sustain the rally in REIT stocks in the near term. Market sentiment will likely favor interest rate-sensitive areas of the market such as REITs.”