The TSC Streetside Chat: The REIT Roundtable Returns

The first half of the year wasn't kind to many investors. However, it was considerably more pleasant if you were fortunate enough to own real estate investment trusts . As the S&P 500 slipped more than 13%, the Morgan Stanley REIT index posted a positive return of more than 13%, including a current dividend yield of 6.6%.

But can the REITs' run continue? With a weak economy, real estate is feeling a pinch. Vacancy rates in commercial real estate have increased, and rents are declining. Many investors wonder how long REITs can hold onto their gains as fundamentals deteriorate.
Last month, the TSC REIT Roundtable gathered to address the question of whether REITs were at an apex. Members also offered their outlook for various property sectors and their best ideas for REIT investors. At the table were Ritson Ferguson, president and portfolio manager at CRA Real Estate Securities; Christopher Haley, director of real estate research at Wachovia Securities; Art Havener, senior real estate analyst at AG Edwards; Jim Kammert, senior real estate analyst at Goldman Sachs; Jim Sullivan, senior real estate analyst at Green Street Advisors; and Todd Voigt, senior analyst at Cliffwood Partners.

Here we'll examine the current state of the REIT market and what the second half of 2002 holds for REIT investors. We'll also look at multifamily and retail REITs.

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Chris Edmonds: REITs have been tremendous relative performers so far this year as investors look for places to hide. What's behind the success, and can REITs continue their run? ...