US - Real Estate Investment Trusts may be staging an investment comeback and breaking out of the trough they were stuck in for the last three quarters of 2007, suggest figures released by the National Association of Real Estate Investment Trusts (NAREIT).

Although the total return of the US REIT market was nearly flat for the first quarter of 2008, all other market benchmarks began the year by sinking into negative territory.

The FTSE-NAREIT All-REIT index was down 0.42% and the FTSE-NAREIT Equity REIT index was up 1.4% - compared with the Dow Jones Industrials which was down 7.55%, the S&P 500 down 9.4%, the Russell 2000 down 9.9%, and the NASDAQ Composite down 14.07%.

REIT recovery began in February, when the entire sector, except hotels, made gains for the first time since the beginning of 2007.

By March, it became clear large-scale investment was moving in again and both self-storage and residential led the charge, with self storage showing a 20.23% total return for the first quarter, and residential up 11.2% - both these sectors were among the hardest hit in 2007. However, industrial and office remained down, by around 4%, as did specialty properties, down 7.7%.

Looking at previous downturns in the REIT markets may give some perspective on what is happening now, suggested Brad Case, vice-president of research and industry information for NAREIT.

Two previous downturns - in the late 1980s and the 1990s -  followed similar patterns as both produced falls of around 24% and the REIT market is now showing an overall decline of around 27%. The 1980 downturn lasted around 14 months duration "and that's where we are now," said Case, while the trough in 1990s lasted 23 months.

Case pointed out in both previous downturns, the upturn was very rapid, although he expressed a note of caution, as he added: "It is too early to say if this is really the bottom, but it is true that the way up tends to be rapid."

REITs and direct real estate investment are driven by the same forces but not at the same pace, he also noted.

"REITs markets lead the direct market," Case said, "and there is likely to be a time when REITS are moving up while the private market is still moving down."

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