Happy Birthday! The REIT Is Back, Baby!
Just two years ago we declared 2008 the “Worst. Year. Ever.” for Real Estate Investment Trusts. Fortunately, investors have roughly the attention span of an infant, and they’re already lining up to give the funds a hearty birthday back slap .
Fifty years ago Ike signed legislation making investing in real estate much more accessible to people with only a few thousand bucks to spare. Since then it’s grown to $70 billion business annually. Despite the battering they’ve taken in the last few years, today comes the impressive news that 14 well-established REITs have increased their payouts to shareholders every year for the last 10 years. One, Federal Realty Investment Trust, has upped its payout for the last 43 years.
Several articles and bloggers have come forward declaring it’s time to re-evaluate the REIT once again. “Investment history proves to us that those with strong management, well thought-out business plans with the ability to be flexible enough to augment strategy and tactics, and do not get seduced into overleveraging during times of loose monetary policy win time and time again,” Gregory Genovese, of Pacific Valley Realty Capital told The Street.
Of course, let’s keep the Champagne corked for now. REITs may have been rebounding much more quickly than expected, but some point out that enthusiasm rather than a robust recovery in property values is what’s driving REIT indexes up. “I would ascribe this REIT surge to general investor bullishness and a hunger for dividends rather than to a commercial real estate rebound,” wrote financial blogger Jeffrey Kosnett. “If the rally isn’t backed up by improved industry fundamentals soon it will crash and burn.”
Sobering words indeed.