WASHINGTON, DC-The National Association of Real Estate Investment Trust’s biannual pulse of their industry show that REITs suffered a setback with the stock market volatility earlier this spring, but are still outperforming the larger market. Also, these companies continue to raise debt and equity in significant amounts. Unlike last year, though, this capital raising is largely geared to acquisitions--and thus it is unclear whether it will continue if acquisition opportunities don’t materialize in the second half of this year.

According to NAREIT’s Mid-Year report, REITs raised $22 billion in initial debt and equity capital offerings so far this year. Also, the FTSE/NAREIT index showed a 10.23% compound annual total return in June for the previous 12 months. Indexes measuring the total stock market for the same time period contracted by 1.59%. 

It is not surprising that REITs are outperforming by such dramatic levels, says NAREIT general counsel Brad Case. "REITs represent 10% of the entire commercial real estate community, but they are the healthiest part of that community. They have had access to capital and didn’t get themselves into trouble," he tells GlobeSt.com. 

It is unclear whether REITs will continue raising capital at the levels they have thus far this year. Presumably, if the next six months matches the first half of 2010 REITs will best the $35 billion raised in 2009. However, there are a number of variables to consider before making that call, Case says. "A lot depends on what opportunities come to market. Last year, REITs raised capital largely to pay down debt--this year is about accumulating capital for acquisition opportunities. But if more properties don’t come to market soon I think we will see REITs scale back their capital raising in the second half."