Real Estate Funds Jump on Housing Hopes

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Investors and analysts met with real estate investment trust companies at the National Association of Real Estate Investment Trusts REITWeek 2009 in New York this week and liked what they heard.

For the five trading days ending June 4, the average real estate fund advanced 7.5%, excluding inverse funds that sell short the property market.

The National Association of Realtors reported this week that April pending home sales jumped 6.7% as distressed sellers lowered prices to move foreclosed and pre-foreclosure properties. Residential construction even edged a bit higher, up 0.6%, as part of an overall construction increase of 0.8% partially due to the U.S. government's $787 billion fiscal stimulus package.

The best-performing real estate fund this week is the LMP Real Estate Income Fund(RIT) building an 18% return. Top holdings saw gains of 33% in Glimcher Realty Trust(GRT), 26% in Macerich(MAC) and 22% in Extra Space Storage(EXR).

CBL & Associates Properties(CBL) rose 19% as it successfully extended the maturities on some of its outstanding debt. Another NAREIT REITWeek presenter, Kite Realty Group Trust(KRG), up 15%, emphasized its geographically diverse asset base, high credit quality tenants and liquid balance sheet.

The second-best performer, ProShares Ultra Real Estate(URE), rising 18% on 200% leverage to the Dow Jones U.S. Real Estate Index, benefited from a 39% pop in First Industrial Realty Trust(FR) as it continued to deleverage by securing $154 million in new loans to retire debt coming due this month. Other winning positions include 34% from Strategic Hotels & Resorts(BEE), 23% from CB Richard Ellis Group(CBG) and 22% from LaSalle Hotel Properties(LHO).

Best-Performing Real Estate Funds for the Week Ending June 4 Fund Ticker Rating Fund Type 1 Week Total Return LMP Real Estate Income Fund Inc RIT D Closed-End 18.30% ProShares Ultra Real Estate URE E ETF 17.78% Cohen & Steers Worldwide Realty Income Fund Inc RWF D Closed-End 15.24% DWS RREEF Real Estate Fund II Inc SRO D- Closed-End 15.09% DWS RREEF Real Estate Fund Inc SRQ E+ Closed-End 14.14% RMR Asia Real Estate Fund RAF E Closed-End 13.91% Cohen & Steers Premium Income Realty Fund Inc RPF E+ Closed-End 13.71% RMR Dividend Capture Fund RCR E Closed-End 13.55% RMR Real Estate Fund RMR D Closed-End 13.33% RMR Asia Pacific Real Estate Fund RAP D- Closed-End 13.19% ProFunds Real Estate UltraSector ProFund REPSX E- Open-End 12.47% Cohen & Steers Advantage Income Realty Fund Inc RLF D- Closed-End 11.85% Cohen & Steers Quality Income Realty Fund Inc RQI E+ Closed-End 11.73% iShares FTSE EPRA/NAREIT North America Index Fund IFNA E- ETF 11.54% Cohen & Steers REIT and Utility Income Fund Inc RTU C- Closed-End 11.23% CGM Realty Fund CGMRX E+ Open-End 10.39% RMR Preferred Dividend Fund RDR D- Closed-End 10.08% Nuveen Real Estate Income Fund JRS D- Closed-End 10.04% JPMorgan U.S. Real Estate Fund SUSIX E Open-End 9.79% PNC Diversified Real Estate Fund PDRIX E- Open-End 9.61% Vanguard REIT ETF VNQ D+ ETF 9.55% RidgeWorth Real Estate 130/30 Fund SREGX U Open-End 9.53% DWS RREEF World Real Estate & Tactical Strategies Fund DRP E+ Closed-End 9.41% Fidelity Advisor Real Estate Fund FHEAX E- Open-End 9.27% Alpine Global Premier Properties Fund AWP E+ Closed-End 9.22% Source: Bloomberg & TheStreet.com Ratings

The only two real estate funds declining in value this week were the inverse funds betting against the industry members of the Dow Jones U.S. Real Estate Index. The ProFunds Short Real Estate ProFund(SRPIX), rated C-minus, and ProShares UltraShort Real Estate, rated E-minus, fell 8.1% and 16%, respectively.