REITs through the roof in 2010

Real estate investment trusts finished 2010 with a gain of nearly 28%, matching the stellar returns of 2009 and nearly double the performance of the S&P 500 last year. The National Association of Real Estate Investment Trusts reported today that the FTSE Nareit All REITs Index gained 27.6% last year, while the S&P gained 15%. The total equity market capitalization of the U.S. REIT industry grew by 44% during the year to $389 billion. The industry, however, still fell short of the $438 billion market-cap peak reached at the end of 2006. Apartments and lodging/resorts produced the strongest performance among REIT sectors, gaining 47% and 42.8%, respectively. Even the lowest-performing sectors beat the equity markets. Industrial REITs gained 18.9%, and office REITs gained 18.4%. The $47.5 billion raised by REITs through the public markets was up 37% from 2009, and it nearly reached the record $49 billion raised in 2006. “With moderate leverage and strong cash positions, REITs are entering 2011 well-prepared to expand the strategic acquisition activity that began in 2009,” said Steven Wechsler, Nareit’s president and chief executive. “Access to capital, as well as liquidity and transparency, and business models and management teams aligned with shareholder interests, continue to be the basis for REITs’ excellent long-term performance and appeal to investors,” he added. The U.S.-listed property market outperformed all other global markets, according to the report. The North American segment of the index delivered a 28.7% total return in 2010, while the Asia segment gained 17.2%, and the Europe segment gained 9.2%.