Real Estate Rallies as REITS, Stocks Build Gains

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May 15 (Bloomberg) -- Bloomberg's Scarlet Fu and Mike Regan examine the rally in real estate stocks in "On The Markets" on Bloomberg Television's "In The Loop."

Trusts.

All but one are reads.

A group that was left behind in last year's rally.

Real estate companies were the only ones to fall last year, even as the s&p 500 rose 30%. a little bit of a snap back this year.

A very well improving commercial real estate market.

The reports this week, the bid for the town in new york show -- people getting more comfortable with the stocks this year for sure.

The macro environment plays into this as well.

Interest rates are being held at low levels for longer than people expected.

That is the predominant story for this.

Last year, everyone assumed bond yields were going to go up.

That has not happened.

Yields going even lower, to the lowest of the year.

A lot of that is because of the european speculation of the central bank.

The real risk is what happens to interest rates going forward, not only for raising the costs to buy money, but the dividends.

As treasury yields go higher, if they do, it is a much safer bet.

Economists are looking for the yield on 10 year treasuries to rise above the dividend yield as soon as the end of this year and go above it in 12 months.

If those analysts are right about treasury, that is going to -- what are the dividend yields on the s&p real estate index?

It is about 2.9% right now.

That is only about a quarter percentage point above the 10 year treasury yield.

That attractiveness is shrinking quickly as the real estate rally continues.

How about the fundamentals of this group.

Solid earnings growth this year.

The best growth of the 24 groups.

Slowing down for projections in 2015 and 2016. there is room for them to increase their dividends.

The projections are to about 3.2% in 12 months.

Those treasury yields are forecast to go even higher.

It will be an interesting battle to see which yield is more attractive by the end of the year.

Are they all commercial property, health care space, how does this breakdown?

Health care as though one of the real bright spots.

Htc is a health investment like senior assisted living.

They are among the biggest gainer and biggest dividend increases.

We will be back on the market

This text has been automatically generated. It may not be 100% accurate.

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