Real estate investment trusts prove disappointing in 2007
Since January 2001, I have regularly suggested that investors consider adding real estate investment trusts, or REITs, to their portfolios. In that time, the total return from REITs through 2007 has been about 273 percent. Thus, investors who followed the suggestion did quite well.
However, 2007 was a very bad year for REITs. They underperformed the market by 23.3 percent with a total return of minus 17.8 percent.
In February 2007, I said in this column, “Recently, the REIT index was already ahead almost 8 percent, including REIT dividends at an annualized 3.8 percent. As we will see, this performance may mean that much of REITs’ 2007 return has already occurred.”
Unfortunately, as 2007 unfolded, this turned out to be an understatement. February was the high-water mark for REITs in 2007. From that point on, REIT investors saw a steady trend downward.