REITs Score Big

Grace K. Henry & Michael Sheehan

Physician's Money Digest, March15 2005, Volume 12, Issue 5

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With the hubbub surrounding realestate ventures, some savvy investorssampled real estate investment trusts(REITs)—not a bad move. The NationalAssociation of REITs (NAREIT; www.nareit.com) Composite Index returned atotal of 30.4% and a dividend yield ofabout 5% in 2004, outpacing most otherstock market benchmarks for the 5thconsecutive year. Retailwas the strongest REIT property sector(40.2% total 2004 return) and residentialapartments fared well (34.7%). Healthcare didn't do too badly with a totalreturn of 21.7%. The story was similarglobally. The European Public Real EstateAssociation (EPRA)/NAREIT GlobalReal Estate Total Return Index gainedalmost 38% in 2004, fueled primarily byEurope (up 52.7%). REITs areconsidered a highly aggressive investment,so be sure to proceed with carewhen considering them for your portfolio.For 2005, analysts are forecastingtotal returns in the mid-to-high single digitson average, which is competitive withother stock and bond benchmarks thisyear, but not quite as hot as past years.