WASHINGTON, DC-The National Association of Real EstateInvestment Trust’s biannual pulse of their industry show that REITssuffered a setback with the stock market volatility earlier thisspring, but are still outperforming the larger market. Also, thesecompanies continue to raise debt and equity in significant amounts.Unlike last year, though, this capital raising is largely geared toacquisitions--and thus it is unclear whether it will continue ifacquisition opportunities don’t materialize in the second half ofthis year.

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According to NAREIT’s Mid-Year report, REITs raised $22 billionin initial debt and equity capital offerings so far this year.Also, the FTSE/NAREIT index showed a 10.23% compound annual totalreturn in June for the previous 12 months. Indexes measuring thetotal stock market for the same time period contracted by1.59%.

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It is not surprising that REITs are outperforming by suchdramatic levels, says NAREIT general counsel Brad Case. "REITsrepresent 10% of the entire commercial real estate community, butthey are the healthiest part of that community. They have hadaccess to capital and didn’t get themselves into trouble," he tellsGlobeSt.com.

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

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