REIT return will be healthy for 2002

Real Estate Weekly, Feb 6, 2002 by Parke Chapman

John C. Cushman is bullish on REITs in 2002.

Cushman & Wakefield's chairman of the board predicts that total returns on REITs will be in the 10 to 12% range for this year. Low debt levels make REIT yields more attractive than Treasuries, certificates of deposit and other investment vehicles, according to Cushman.

"The difference between now and the last downturn in the economy is that REITs have debt levels of 50 percent or less. They will be very stable this year, and a good investment," he said.

He acknowledged that consolidation will continue to drive the REIT industry.

"There are probably twenty REITs which would be better positioned as private companies or merged with other larger REITs," he said.

Cushman singled out a few hot REITs as Equity Office Products, Boston Properties and Vornado. Some solid REITs are General Growth, Macerich and Simon, he added.

"We are in a difficult period for the real estate industry. Unemployment is going up, and real estate is employment driven. But over the next 6 to 12 months, I expect that solid REITs will be heard to beat," said Cushman on an upbeat note.

The Cushman tip sheet is nothing to be ignored. In the past, Cushman has--by his own account--made some excellent predictions about the REIT market. Though times have changed, perhaps drastically, he is still confident that his picks are dead-on.