Is it the Right Time For REITs?
REITs of all stripes have been caught up in the stock market meltdown of 2008. Mortgage REITs were especially hard hit, with many now in liquidation and many more on the verge of being liquidated. Mortgage REITs that managed to survive have seen valuations cut in half, with many down more than 90% since the crisis began.
However, REIT investments are cyclical just like the real estate in which they invest. REIT valuations will certainly recover as the crisis ebbs, Indeed, in past downturns REITs have not only led share prices down, they have also been the first to signal economic recovery, often leading the broader stock market out of the valuation doldrums.
