If there was any doubt that REITs could – as they have in the past – remain relatively immune from broader market trends, Q3 returns have doused those fantasies. Even the REITs relatively well positioned turned in dismal earnings, such as Washington Real Estate Investment Trust’s losses of 24%.

It is clear that REITs can no longer be considered a safe counter cyclical investment as they have in the past, finds a newly released report by Ernst & Young, called Riding out the storm: Global Real Estate Investment Trust Report 2008.”

For the last eight years REITs have been the go-to alternative for investors, ever since the dot.com implosion, Kjerstin Hatch, principal and portfolio director for Madison Capital Management in Greenwood Village, CO, tells GlobeSt.com. “For a long time now REITs have benefited from a low interest rate environment. Now there is a re-pricing of leverage, which is troublesome for many of these companies, of course.”

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