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17 August 2000
REITs Continue Surge Through 3rd Quarter Midway Point - Real Estate Securities Post 25.1% Return YTD
BERKELEY, CALIF. -- Midway through third quarter of 2000, the S&P is still struggling to find positive territory while real estate securities (REITs) continue to rebound, according to the investment advisors Lend Lease Rosen Real Estate Securities LLC.
"We have just witnessed a reversal of fortunes, " said Michael A. Torres, president of Lend Lease Rosen. "REITs are no longer the laggard in the equities performance derby, having posted 9.3% total return in the third quarter to date and 25.1% gains year to date, as measured by the Wilshire REIT Index."
REITs have continued their solid performance through mid-August, and year to date are beating the Standard & Poor's 500-stock index by more than 20 percent, Torres added. Through the seven months of 2000, the Lipper Real Estate Fund Index reported that real estate mutual funds delivered an average 20.8% return year to date, compared to 2.5% over the same period in 1999.
"Investors are discovering that REITs not only work as a hedge to equity investments, but also provide an efficient means of owning real estate, have sustainable growth and are easily traded. These characteristics should convince battered tech investors into becoming long-term believers," Torres said.
Hotel REITS Grab the Lead
Most property types have delivered double digit returns thus far in 2000. Hotel REITs have produced a 13.1% gain, the best total return during the third quarter in the Wilshire REIT Index, followed by the diversified (up 12.1%) and apartment (up 10.9%) sectors. Hotel REITs have performed very well year to date, up 37.9%. Retail REITs are still struggling to attract investor attention as evidenced by the relative under performance. Quarter to date, the factory outlet malls are down 4.0%, shopping center REITs are up a modest 2.4% and regional malls are up 7.5 % and the Wilshire REIT Index is up 9.3%.
"The spike and collapse of the dot.com fever has caused investors to reconsider less volatile investments, that provide stable dividend income," Torres added. "While real estate securities are no longer cheap, REITs remain very compelling investments because of their dividend yield and moderate earning growth driven by favorable property market conditions."
Lend Lease Rosen Real Estate Securities LLC provides institutional investors and high net worth individuals with a research-driven investment process to real estate securities investment. The company manages $1.4 billion in assets, primarily for public and private pension funds. Lend Lease Rosen is a subsidiary of Lend Lease Real Estate Investments, advising on US REIT investments for their funds and client portfolios.
Lend Lease Real Estate Investments is one of the largest real estate investment managers in the world and a leading U.S. real estate advisor to pension funds. The company has $48 billion in real estate and commercial mortgages under management worldwide, including $41 billion in the United States.
Lend Lease Real Estate Investments is part of Lend Lease Corporation, one of the world's largest public real estate companies, which also includes Bovis Lend Lease, a premier project management and construction firm, and Lend Lease Development, a prominent merchant developer. Lend Lease Corporation has an AA-credit rating from Standard and Poors.media
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