Did someone say something about the deflating of a real estate bubble? Sure, home prices may be falling, but real estate investment trusts (REITs) outperformed broad market averages in the first quarter of this year. Standard & Poor's REIT equity analysts believe this outperformance can continue.
The REITs' performance in the first quarter is particularly impressive, considering their returns this decade. In the past 10 years (ended March), the S&P REIT composite index posted a total return of 4%, vs. the S&P 500's 3.5%. Then, in 2007, as news about a real estate bubble and subprime mortgage problems filled the headlines, REITs fell about 16%.
But in the first quarter of 2008, the group posted a 0.8% total return, at a time when the S&P 500 index fell 9.4%.
We screened our database for REITs with 4- (buy) or 5-STARS (strong buy) rankings from S&P Equity Research. Seventeen REITs made the cut:
|Annaly Capital Management||NLY|
|Developers Diversified Realty||DDR|
|First Industrial Realty||FR|
|General Growth Properties||GGP|
|National Retail Properties||NNN|
|PS Business Parks||PSB|
|Simon Property Group||SPG|