The Real Deal Miami

Commercial REITs end year on good note, outlook bleak for 2010

December 30, 2009 12:30PM

The Dow Jones Equity All REIT Total Return Index is ending 2009
strongly with a 31 percent increase, according to the Wall Street
Journal. During 2009, REITs  were able to stay afloat by using proceeds
to pay down debt and by utilizing other cost-saving measures including
dividend cuts and paying dividends with stock instead of cash. “It’s
been very much a roller-coaster ride this year,” said Alexander
Goldfarb, an analyst with Sandler O’Neill & Partners. And the
outlook for 2010 is not positive. Chris Lucas, a senior analyst at
private equity firm Robert W. Baird, said he doesn’t expect REIT
returns next year to exceed 10 percent because they are generally more
expensive than other stocks and bonds and still carry too much debt.
But, he said, self-storage, industrial and student-housing REITs will
perform well next year since they aren’t dependent on job creation. [WSJ]