How to Play REIT Uncertainty

REIT stocks continue to suffer from high volatility, but the sector's troubles are more reflective of investor skittishness over the true value of commercial real estate than actual fundamentals.

Almost every day, business-news outlets are putting out stories about how the commercial real estate market is set to implode. This is creating fear among many investors and leading them to shy away from REIT stocks. The US MSCI REIT index has fallen 24% over the past year, including dividend returns.

"There is a big disconnect with what is going on in commercial real estate and what the market thinks is going on in commercial real estate," says Rich Moore, a REIT analyst with RBC Capital Markets. ...