DID YOU KNOW:
Equity REITs are poised to outperform the broader market indexes for the seventh consecutive year? REITs' strong performance in 2006 has been led by double-digit returns from the residential sector. In fact, returns posted by the residential sector are better than they've been in five years.
[November/December 2006]
At press time, equity REITs exhibited exceptional year-to-date total returns. Stifel Nicolaus & Co.'s REIT analyst and managing director, David Fick, attributes the industry's strong performance to the capital markets cycle and improving fundamentals. "Those two factors have continued to drive valuations, and all of that is supported by the view that investors see real estate as an asset class where they are under-allocated," he says.
The residential sector plays a part in the industry's strong performance during 2006, at press time posting a 32.8 percent total return. Another strong showing is the diversified sector, which posted a 27 percent total return at the end of September. According to various analysts' reports, the residential sector continues to benefit from higher interest rates and reduced affordability of single-family homes, while the office sector continues to benefit from low vacancy rates and limited supply.
REIT Property Sector Performance
(Year-to-date total returns as of September 29, 2006) |
 |
| Source: NAREIT |
