RealEstateInvestor.com has Confidence in REITs Recovery

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Due to the recent reports about real estate investment trusts (REITs) recovering dramatically, in light of the current economy, RealEstateInvestor.com (REI) believes that REITs are perfect for the conservative investor.

Due to the recent reports about real estate investment trusts (REITs) recovering dramatically, in light of the current economy, RealEstateInvestor.com (REI) believes that REITs are perfect for the conservative investor.

Just last March, returns on property-owning REITs had fallen by an average of 75 percent from their peak in 2007. But as the larger stock market has begun to recover, so have REIT shares. According to the National Association of Real Estate Investment Trusts, many REITs are making up for their losses -- from March 6 to May 5 alone, and overall returns increased by 55 percent.

This year, the top categories for REITS are: lodging, up 3 percent; manufactured homes, up 2.5 percent; and free-standing retail stores, up 0.03 percent.

So is the REIT market safe? REI experts think so. "An REIT is really like having an investment partnership because you have partial ownership in a commercial property while proven experts invest your money," REI CEO Colin Egbert explains. "And REITs are exciting because there is a constant flow of money into the commercial property which generates rental income from its rental tenants."

Though Egbert is aware that REITs are generally safer during sound economic times and riskier during economic downturn, he agrees with other analysts that publicly traded REITs will lead the rebound in commercial real estate, due to their ability to raise money by selling securities, an option not available to private firms.

"REITs will align with equity markets to pay down debt thus positioning themselves as tools for obtaining new assets in the coming months," Egbert says.

Even though REITs are recovering, Egbert provides some caution to clients and other investors seeking advice.

"As with anything, especially dealing with our market right now, investor, beware. The secret, is finding an REIT you feel comfortable with. Investigate how the REIT pays out--some offer immediate cash flow while others give a long-term capital gain. The important thing, make sure it works with your investment."

With these words of advice, he still remains optimistic that overall market conditions will become more stable.

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Colin Egbert

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Colin Egbert
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