Real Estate Funds (REIT’s) outperform exchange-traded funds

NEW YORK – Aug. 16, 2010 – Analysts report that the surprising outperformance of exchange-traded funds that track real estate stocks since the first of the year suggests improvement in the economy and the battered commercial-property sector.

In their second-quarter earnings outlook, analysts at Keefe, Bruyette & Woods write that REITs have outperformed the broader market “in anticipation of upcoming growth opportunities, internally, through improving fundamentals, and externally via acquisitions.” The hottest REIT stocks so far in 2010 have been apartment sector ones, specifically Apartment Investment and Management Co. and Equity Residential Properties Trust.

Both companies posted quarterly earnings recently and the stocks have gained more than 30 percent since Jan. 1. A solid quarterly report from Equity Residential coupled with improving market conditions “should have a positive impact on the overall apartment sector,” reports Stifel Nicolaus analyst Rod Petrik. “The company appears well positioned to take advantage of positive market trends in the apartment industry.”

Source: MarketWatch, John Spence (08/01/10)

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