Playing the Real Estate Game
This column was originally published on RealMoney on Feb. 8 at 8:53 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.
The bidding war for Equity Office Properties (EOP Quote) finally came to a conclusion yesterday, but will this also bring to a close the incredible price run for commercial real estate properties and REITs? Some believe this record-setting $39 billion buyout will mark the top for this sector, which, as measured by the iShares Dow Jones Real Estate Trust (IYR Quote), has gained some 90% over the past two years.
REITs have obviously performed well, but one of the biggest price drivers has been takeover activity, which has pushed valuations to frothy levels. With the Equity Office deal complete and the bidding for Mills (MLS Quote) nearing a conclusion, one has to wonder if, now that returns on investments are less attractive, the takeover activity and the accompanying rise in prices will cease.
The End Is Near, Not Here
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