UNITED STATES - LaSalle Investment Management Securities has indicated the performance of US REITs was lackluster in the fourth quarter of 2007 and further is likely to be for the coming months.
Keith Pauley, managing director at LaSalle in the real estate securities group and author the firm's 2007/2008 US real estate securities market preview and outlook, said the performance of the REITs will remain on the negative side for a while.
"The performance of REIT stocks are down 30% from their peak at February of 2007. The net asset value of the REITs has dropped by 5% for the same time period."
He continued: "The REITs are going to muddle through this situation for the next several months. It could be until the second half of 2008 before there is any noticeable change to this situation."
But this situation does not apparently mean bad news for everyone, as LaSalle claims this presents investment opportunities for investors - either some REITs or pension funds -using all-cash or low amounts of leverage in the range of 50- 60%.
Moreover, the evolving market may give these kinds of investors the chance to buy into more profitable assets which have previously had higher leverage over the past few years.
That said, the apartment REITs have been performing better than expected so far this year. There is strong rental demand, according to LaSalle, as more people are looking to rent and less are interested in buying a single family home while the performance of the market has also been helped out by limited amounts of new apartments being developed.