RealEstateJournal | Real-Estate Investment Trusts Rally Again, Defying Predictions

RealEstateJournal | Real-Estate Investment Trusts Rally Again, Defying Predictions: "Real-Estate Investment Trusts Rally Again, Defying Predictions By Jennifer S. Forsyth From The Wall Street Journal Online It seems to defy common sense: Real-estate stocks continue to rally -- even as interest rates rise. Eighteen months ago, many investors began to sell off their real-estate holdings amid warnings that the property market might have peaked. But real-estate investment trusts -- tax-advantaged investment companies whose shares trade on major exchanges -- have continued to outperform the market. This year alone, the Dow Jones Equity REIT Index is up almost 13%, compared with a gain of almost 4% for the Standard & Poor's 500-stock index. It's the fastest run out of the starting gate for REIT stocks in six years, according to SNL Financial, a research firm in Charlottesville, Va. 'The run-up in REIT prices has certainly been surprising, even to boosters of the industry like us,' says T. Ritson Ferguson, chief investment officer for ING Clarion Real Estate Securities, a Radnor, Pa., investment-management firm. The rally has partly been driven by mutual funds and other big investors, some of whom bailed on the sector 15 to 18 months ago and are now buying the stocks again, egged on by recent improvements in the outlook for almost every sector, particularly hotels and offices. REITs have been helped by fund managers and other investors who missed the big run-up and now fear that not owning them is hurting performance records. Some money managers, having been wrong once before, are reluctant to tell small investors to bail out of the sector. Others factor in an individual's total exposure to real estate -- including homes and investment properties -- to determine whether that person s"