1 July 2009 ? The Dow Jones Equity All REIT (Real-Estate-Investment Trusts) Total Return Index issued its quarterly report on 114 publicly traded REIT stocks and the findings were positive: on average these stocks rose 28.9% by the end of the 2nd quarter (April-June 2009), the biggest quarterly gain since the index debut in 1989.
Many experts had predicted the end to many of the of REIT?s that packaged stocks in the hotel, retail, office, apartment, industrial, or self storage sectors ? on average these sectors posted a 20% or more gain from last quarter, with hotels jumping 73%. The weakest stock: manufactured homes with a positive, but smaller change of 4.9% from last quarter.
These positive gains are the results of the REITs issuing more stocks which raised the capital to pay down the large debt each stock had accrued in the real estate downturn. Unfortunately, issuing more stock dilutes the value of existing stocks, and as experts note, ?weakens their balance sheet.? Analysts of these stocks are reporting that as much as $35 billion in capital needs to be raised so these REITs can bolster their balance sheets, giving them the capital to take advantage of the ever-increasing distressed properties available in the marketplace. This, in-turn, would fatten-up the REITs portfolio and create investor confidence once again in these products.Email This Post To a Friend.