For the past two years, real estate stocks have outperformed the broader stock market. However, that trend appears to be ending, with the Dow Jones All Equity REIT Index posting a negative 15 percent total return in the third quarter of this year[1]. This is the largest drop since the first quarter of 2009, and according to analysts likely indicates that investors are exiting REITs because they are “economically sensitive.” The trend began immediately following August 2011’s “weak jobs report, poor housing data and Europe’s percolating debt crisis.”
“[The situation] is pretty dismal,” says Robert W. Baird lodging analyst David Loeb. “REITs that own and manage hotels, industrial space and office buildings posted the worst returns” during Q3, reported the Wall Street Journal. There was some bright news, however, with REITs that buy U.S. mortgage debt rising in Q3 and “erasing losses” from earlier in the year[2].
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[1] http://online.wsj.com/article/SB10001424052970203791904576611022933971948.html
[2] http://www.businessweek.com/news/2011-10-04/mortgage-reits-rise-to-reverse-tumble-on-financing-concern.html
