Greet the REITs

Daily Freeman (Kingston, NY) - - NATION+WORLD -

The S&P 500 has a new sec­tor, and it’s not do­ing that well.

Real es­tate com­pa­nies are a small part of the mar­ket, but un­til re­cently, they were a strong one. The Real Es­tate In­vest­ment Trusts that make up the sec­tor re­turn a lot of cash to share­hold­ers and are taxed at a low rate.

The sec­tor is dom­i­nated by Si­mon Prop­erty Group, an In­di­anapo­lis-based com­pany that owns more than 100 shop­ping malls and man­ages an­other 200 across North Amer­ica and Asia. For years, REITs per­formed bet­ter than the broader stock mar­ket or other as­set classes like bonds and gold. But a com­bi­na­tion of con­cerns such as in­ter­est rate move­ments, prop­erty val­u­a­tions and new sup­ply has re­cently weighed on the sec­tor, ac­cord­ing to in­dus­try body NAREIT.

Real es­tate stocks slipped in the third quar­ter, and so far this year the sec­tor has only risen 2 per­cent, com­pared to a 5 per­cent gain for the en­tire S&P 500.

Emerg­ing mar­ket stocks have over­taken REITs as the index’s top per­form­ing sec­tor over the last year, and banks and health care com­pa­nies are the only sec­tors to per­form worse than REITs so far in 2016. As of Wed­nes­day’s close, real es­tate in­vest­ment trusts were the worstper­form­ing sec­tor of the S&P 500 this year, just barely be­hind health care stocks.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.