REITs in Buying Position

December 28, 2009

Real estate investment trust (REIT) returns outperformed the broader real estate market in November. The FTSE NAREIT Indexes are now up more than 100 percent from their March 6 lows. The growth is largely being fueled by the recapitalization of the REIT industry, where REIT public equity and debt offerings have raised nearly $35 billion with 86 secondary equity offerings, eight initial public offerings, and 33 unsecured debt offerings in 2009. According to these numbers and expected trends, well-positioned companies could go on a buying spree.

Real estate investment trust (REIT) returns outperformed the broader real estate market in November. The FTSE NAREIT Indexes are now up more than 100 percent from their March 6 lows. The growth is largely being fueled by the recapitalization of the REIT industry, where REIT public equity and debt offerings have raised nearly $35 billion with 86 secondary equity offerings, eight initial public offerings, and 33 unsecured debt offerings in 2009. According to these numbers and expected trends, well-positioned companies could go on a buying spree.

National Association of Real Estate Investment Trusts (NAREIT) economists expect values to continue to drop through 2012 for most properties. But NAREIT economist Brad Case comments that the better-managed part of the market is showing the most improvement; a defining factor for successful properties seems to be property management expertise.

Case predicts that more properties will come onto the market at rock-bottom prices, and REITs will be among the few parties actually able to bid.

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