Investors turn away from once-hot REITs

real-estate-investment-trusts-reits-p1By Robbie Whelan | The Wall Street Journal

Real estate investment trusts posted negative returns in the third quarter and continued to trail the broader stock market, raising the prospect that the sector is losing its luster in the eyes of investors.

The Dow Jones Equity All REIT Total Return index, which tracks 147 publicly traded REITs, delivered a total return of minus-2.7% in the July-September period, its worst performance since the third quarter of 2011. By comparison, on a total return basis, the S&P 500 index gained 5.2% in the third quarter and 2.9% in the second quarter.

“We’re in the second quarter of blah returns, and I think there certainly could be more of this funk going forward,” said Larry Raiman, chief executive of LDR Capital Management who runs a $180 million REIT fund. “Based on what investors seem to be telling us, they still think [interest] rates are going up. The REIT equities are not poised for any substantial rebound.”


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