REIT index gains 13% in 3Q

Access to the public-equity and debt markets continues to boost performance among real estate investment trusts, according to the latest report from the National Association of Real Estate Investment Trusts. The FTSE NAREIT Equity REIT Index gained 12.8% in the quarter ended Sept. 30. By comparison, the S&P 500 gained 10.7%. It was the best quarter for the REIT index since the third quarter of last year, when it gained 33.3%. Through the first nine months of 2010, the REIT Index gained 19.1%, compared with a 3.9% gain by the S&P 500 over the same period. Over the 12-month period ended Sept. 30, the REIT index was up 30.3%, while the S&P was up 10.2%. Much of the rally is being attributed to an industrywide recapitalization that began more than a year ago. According to the NAREIT report released today, REITs raised $34.7 billion on 130 equity and debt offerings in 2009, and $32.5 billion on 131 offerings through the first nine months of this year. The 2010 data includes $14.9 billion raised through 69 secondary equity offerings and $1.6 billion through eight initial public offerings. REITs used the proceeds of the offerings to pay down debt and make acquisitions of properties. The recapitalization trend has effectively reduced the debt ratio of the index (debt as a percentage of total market capitalization) to 43.5%, which is down from 66.3% at the REIT market’s low point in March 2009.