Investors Turn From Once-Hot REITs

Investors fled Real Estate Investment Trusts en mase since mid May when Federal Reserve Chairman Ben Bernanke suggested that the Federal Reserve’s accomodative monetary policy might soon come to a close.  Their concerns appear to be  twofold; there’s concern that higher borrowing cost will impair REIT’s ability to continue to pay handsome dividends and also concern that as prevailing rates increase there will be more investment alternatives which offer income streams that will compete with REITs and in turn provide more competition for them as a compelling  investment alternative .  Although both arguments carry weight, neither consider the appreciation potential of the underlying properties that could come with a higher inflation environment.  To view the entire article from the Wall Street Journal CLICK HERE.

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