Why REITs Deserve Your Attention

NEW YORK (TheStreet) -- As the real estate market shows some signs of prosperity, real estate investment trusts have been drawing investor attention and for good reason.

At the commercial real estate level, REITs are attractive because they offer an opportunity to a debt market that banks, insurance companies and other financial institutions are not considering. A weak labor force, declines in consumer spending and other recessionary factors put pressure on income-producing properties and increased stress on the loans that these properties supported. In turn, this created an opportunity for REITs to lend to these income-property owners.

As for residential REITs, they are drawing attention because of their record-low prices. Some investors think that the worst has past for residential real estate and are looking to buy when prices are low. The trends in both commercial and residential REITs has enabled the iShares Dow Jones US Real Estate(IYR Quote) to reap the benefits. The ETF is up 90% from its March low of $22.21 to close at $42.21 on Thursday.

This attractiveness appears to be emerging globally as well. In fact, international REITs are drawing even more attention because they earn profits in foreign currencies and are enabling investors a new way to hedge a weakening dollar. As a result, the iShares FTSE/NAREIT Global ex-US(IFGL Quote) has more than doubled from its March low of $14.63 to close at $30.41 on Thursday.

When investing in these equities, keep in mind the inherent risks that are involved. A good way to mitigate these risks is through the implementation of an exit strategy, which tells investors specific price levels when an upward trend in equities could be coming to an end. Such an exit strategy can be found at www.SmartStops.net.

Written By Kevin Grewal in Laguna Niguel, Calif.