REIT Review News.

NEW YORK, December 27, 2006 – Reit Review.com –

As the year draws to a close, the results from Wall Street show a clear investment winner for the year: Real Estate. Analysts at Morningstar Inc., ranked Real Estate Investment Trust (REIT) mutual funds as a top winner for 2006, with gains of over 30% year-to-date.

To put that into perspective, the Dow Jones Industrial index is up approximately 15% for the year, and the Standard & Poors 500 index has a gain of about 13%.


That probably comes as quite a surprise to anyone who has been following the big “real estate bubble” story over the past year.

It turns out that pockets of softness in residential home prices has had little or no impact on the typical commercial, industrial and rental properties that REITs are predominantly invested in.

If anything, the run up in home prices over the past five years, combined with recent reduced home selling rates have actually driven up demand and returns in the residential rental portion of REIT portfolios.
Recent mega-deals in the REIT market, including the largest real estate deal ever; the Blackstone Group’s acquisition of Equity Office Properties Trust (NYSE: EOP) for $36 billion in cash and debt have helped to support REIT valuations across the board.

Additionally, narrowing CAP rates have also had a favorable impact on REIT pricing.
With REIT’s paying a large portion of their income as dividends every year, they are attractive for dividend sensitive investors and compete for investor interest with high yielding utilities like Con Edison (NYSE: ED), and financial industry giants like Citigroup (NYSE: C) and J.P. Morgan Chase (NYSE: JPM).
While 2006 returns don’t create any guarantees for the future, much of what made REITs such a success in 2006 is still present as we head into 2007.

Barring any cratering of the economy, 2007 looks like another good year for REITs.