Real estate investment trusts have been a good option for investors in recent years, and that is likely to continue.
"REITs are and have been a tremendous source of excessive yield," said Jamie Anderson, managing partner of Philadelphia-based Tierra Partners, which offers a leading real estate exchange-traded fund focused on Latin America. "This has driven REITs to where they are trading at historically high valuation."
John Snowden, global portfolio manager at Resource Real Estate in Philadelphia, echoed those remarks regarding the sector's recent performance and future prospects.
But he also said that the same level of return isn't likely in the near future.
His cautious perspective reflects concerns about rising interest rates that could have a big impact on real estate investment. Other analysts have said as much.
"The recent inflow of capital into the REITs as investors looked for higher-yielding stocks appears to have reversed somewhat as an interest rate increase now appears more imminent," according to an October research note from Baird equity research.
Any attempt to increase the borrowing costs of an industry that relies as heavily on loans as REITs tends to chip away at the bottom line. That said, fears over rising rates are overblown, as REITs' success depends more on broader economic fundamentals.
According to Ken Leon, industry analyst at S&P Global Market Intelligence in New York, rising rates will impact the bottom line of REITs that aren't insulated from the change, but won't hurt today's top performers an inordinate amount.
"It is true that when there is a rate hike the short-term rates go up a bit -- the REITs are perceived as interest-rate sensitive -- so they will pull back a little, but I think that's more temporary," Leon said. "It's the economy that really drives the underlying performance of REITS."