Real Estate Funds Continue to Show Gains
If location is the golden rule of real estate, then many who invest in real estate mutual funds might at times feel as if they’ve stumbled upon a great deal in the fanciest building in town.
A big acquisition in the commercial real estate market has led some observers to speculate that demand will continue for companies that invest in real estate.
Known as real-estate investment trusts, or REITs, these companies have shown at times returns greater than 25 percent per year in recent years. REITs, which frequently invest in commercial real estate or larger residential projects such as apartment buildings, have dodged the financial wrecking ball that has left cracks in some parts of the housing market.
In early February, the Blackstone Group, a power hitter in the private equity world, acquired Equity Office Properties in a $23 billion buyout. The bidding war that erupted over the company, whose properties included choice commercial skyscrapers, spurred talk that other REITs might be snapped up by private equity companies looking for places to spend their vast sums of cash.