Real Estate Investment Trusts (REITs) have come back with a vengeance from the financial crisis and recession, and have outperformed the general market over the last 12 months. The industry has also reestablished its access to the capital markets for both equity and debt.

IN PICTURES: What Is Your Risk Tolerance?

Good Times
A recent report from the National Association of REITs (NAREIT) reported that U.S.-based REITs raised $22 billion in capital during the first six months of 2010. The report said that $10.9 billion of debt was raised, with the balance in equity split between initial and secondary offerings.

NAREIT also reported that the FTSE/NAREIT index had a 10.23% compound annual total return for the 12 month period ending June 30. The index is composed of 148 U.S.-based REITs. The Standard & Poor's 500 Index had a compound annual total return of -1.59% over the same time frame.

Several REITs have gone public in 2010, in a variety of sub sectors including retail, office, lodging and industrial. The deals have raised more than $1 billion in capital.

The Companies
The latest was IPO was Hudson Pacific Properties Inc. (NYSE:HPP), which raised $218 million at the end of June 2010. This REIT specializes in the office sub sector and owns eight buildings in California.

Piedmont Office Realty Trust (NYSE:PDM) also focuses on the office sub-sector across the United States. The company has 73 office properties located in major cities including Atlanta, Philadelphia, Los Angeles, New York and Washington D.C. Piedmont Office Realty Trust is one of the best performing REIT IPOs in 2010, and is up 23% since going public in February 2010.

Excel Trust (NYSE:EXL) went public in April 2010, and is down 6% since the stock started trading in the aftermarket. Excel focuses on retail properties including grocery store anchored shopping centers and freestanding stores.

Chatham Lodging Trust focuses on extended stay properties in the lodging area. This one has not performed well since its May 2010 IPO, and is down 18% from its IPO price of $20 per share.

Terreno Realty (Nasdaq:TRNO) is an industrial REIT and went public in February 2010. Terreno Realty owns industrial properties in six markets across the United States. The company has struggled since going public with the stock down 10% since its IPO.

Going REIT
It seems that everyone wants to be a REIT. Weyerhaeuser Company (NYSE:WY) recently declared a special dividend totaling $5.6 billion as part of a plan to convert the company to REIT status. Weyerhaeuser Company plans to change its status to a REIT when the company files its tax return next year. The election will be retroactive to January 1, 2010.

The Bottom Line
REITs suffered during the financial crisis as investors dumped anything associated with real estate and leverage. The industry has now come back and has resumed its access to capital and outperformed the stock market over the last 12 months. (Find out why funds from operations is a superior measure of REIT performance. For more information read How To Assess A Real Estate Investment Trust.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Economics

    The 2007-08 Financial Crisis In Review

    Subprime lenders began filing for bankruptcy in 2007 -- more than 25 during February and March, alone.
  2. Fundamental Analysis

    5 Must-Have Metrics For Value Investors

    Focusing on certain fundamental metrics is the best way for value investors to cash in gains. Here are the most important metrics to know.
  3. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  4. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  5. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  6. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  7. Stock Analysis

    The Top 5 Micro Cap Alternative Energy Stocks for 2016 (AMSC, SLTD)

    Follow a cautious approach when purchasing micro-cap stocks in the alternative energy sector. Learn about five alternative energy micro-caps worth considering.
  8. Stock Analysis

    Analyzing Porter's Five Forces on Under Armour (UA)

    Learn about Under Armour and how it differentiates itself in the competitive athletic apparel industry in light of the Porter's Five Forces Model.
  9. Stock Analysis

    The Biggest Risks of Investing in Qualcomm Stock (QCOM, BRCM)

    Understand the long-term fundamental risks related to investing in Qualcomm stock, and how financial ratios also play into the investment consideration.
  10. Stock Analysis

    The Biggest Risks of Investing in Johnson & Johnson Stock (JNJ)

    Learn the largest risks to investing in Johnson & Johnson through fundamental analysis and other potential risks. Also discover how JNJ compares to its peers.
RELATED FAQS
  1. What is the formula for calculating EBITDA?

    When analyzing financial fitness, corporate accountants and investors alike closely examine a company's financial statements ... Read Full Answer >>
  2. How do I calculate the P/E ratio of a company?

    The price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate ... Read Full Answer >>
  3. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors insight into how efficiently a company (or more specifically, its ... Read Full Answer >>
  4. How do you calculate working capital?

    Working capital represents the difference between a firm’s current assets and current liabilities. The challenge can be determining ... Read Full Answer >>
  5. What is the formula for calculating the current ratio?

    The current ratio is a financial ratio that investors and analysts use to examine the liquidity of a company and its ability ... Read Full Answer >>
  6. What is the formula for calculating earnings per share (EPS)?

    Earnings per share (EPS) is the portion of a company’s profit that is allocated to each outstanding share of common stock, ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center