Real estate investment trusts (REITs) are showing better-than-expected results, leading many investors to reconsider them, despite that they’re no longer in the bargain bin.
REIT shares have doubled from their low point in March, outpacing the 65 percent rebound of the Standard & Poor’s 500-stock index through the end of last year. Plus, many publicly traded REITs, which hold 10 percent of the nation’s commercial real estate, will purchase distressed properties this year.
Those selling will include private REITs and investors who bought into the market during the boom years. Self-storage REITs are considered among the least risky, despite a drop in occupancy and revenue since the recession began.
Some REITs, which are highly sensitive to capital market conditions, are overleveraged and may struggle to find refinancing options this year. It’s estimated the REITs will have $1.5 trillion of mortgage debt coming due over the next four years.
Source: The New York Times, Just How Much Steam Do REITs Have Left?