Reassessing REITs

Financial Planning, August, 2007 by Timothy J. McIntosh

Like the technology bears of the late 1990s, real estate investment trust (REIT) skeptics have been wrong more often than theyÕve been right. Since 2004, REIT bears have been crowing about overvaluation and predicting an ugly end for investors. Still, REITs have sailed on, outperforming the Standard & PoorÕs 500 Index for seven consecutive years. But a closer look at where the REIT market has been, and where itÕs heading, shows why skeptics may finally have their day.

Since its inception in June 2000, through June 29, 2007, the iShares Dow Jones U.S. Real Estate Index ETF (IYR) produced an cumulative return of 318.2%. During the same period, the S&P 500 had an 19.0% cumulative return. This superior performance has led to much growth for the REIT industry. There are...

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