The Real Deal New York

REIT returns slow in second quarter

July 03, 2012 09:30AM

Real estate investment trusts, which have become the darlings of investors over the past three years for their strong returns, are beginning to lose some of their luster, the Wall Street Journal reported. Citing data from the Dow Jones All REIT Index, which tracks 133 trusts, the sector returned just 4 percent in the second quarter, down from 10.5 percent in the first quarter and 15 percent in the fourth quarter of last year.

The Journal said REITs only delivered that modest return, rather than remaining flat for the quarter, because of the recent deal struck in Europe to stabilize banks. The returns were still superior to those of the Dow Jones Industrial Average and the S&P 500 in the second quarter, which yielded negative 1.85 percent and negative 2.75 percent, respectively.

Hotel REITs posted a negative return of 0.58 percent in the quarter because investors feared that travel would wane as a result of an economic slowdown, according to the Journal. Meanwhile, apartment REITs returned just 0.91 percent because investors aren’t so sure landlords will be able to aggressively raise rents as they planned when analyzing acquisitions.

Health-care REITs posted the best quarterly returns, of 10.30 percent, as analysts predict they’ll benefit from an increased number of insured patients thanks to the Affordable Care Act.

As previously reported, REITs have increased their presence in New York City of late. [WSJ]

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