(Source: New York Times)
Real estate investment trusts have long been touted as good portfolio diversifiers because they typically don’t move in lock step with other financial markets. But REITs have hardly been impervious to the recent debacle on Wall Street. By early March, returns on property-owning REITs had plunged an average of 75 percent from their peak in February 2007.
But as the broader stock market has been slowly recovering, so, too, have REIT shares. Many REITs have already made up a chunk of their losses — from March 6 to May 5 alone, overall returns shot up 55 percent, according to the National Association of Real Estate Investment Trusts — and the market may be poised to post some modest gains in the second half of 2009.
The trade association’s index of equity REITs, which own property and constitute the bulk of the market, was up nearly 27 percent from April 1 through Thursday, though it was off 13.5 percent for the year to date, with some property sectors in positive territory. Among the top categories this year were lodging, up 3 percent; manufactured homes, up 2.5 percent; and free-standing retail stores, up 0.03 percent. (The battered mortgage sector was off 1.5 percent, on average, with home-financing REITs up an average of 0.73 percent.)
Does this mean that the worst may be over for the REIT market?
Read Vivian Marino’s full article “Trying to Gauge the REIT Rebound” in the New York Times (June 20, 2009).