WASHINGTON, DC-REITs are still proving their mettle in this economic cycle, with the FTSE NAREIT Equity REIT Index delivering a 14% total return through the first eight months of 2010. The FTSE NAREIT All REITs Index delivered a 13.44% total return for the same period and the FTSE NAREIT Mortgage REIT Index posted a 6.87% increase.

By comparison, all of the other major market benchmarks were underwater for the first eight months of the year: the S&P 500, down by 4.62%; the Dow Jones Industrials, by 3.96%; the Russell 2000, by 2.97%; and the NASDAQ Composite, by 6.84%.

There are a couple of factors driving REITs right now, says NAREIT’s general counsel, Brad Case. The main driver is that REITs have a competitive advantage with their access to the capital markets, he tells GlobeSt.com. There is also this, he says: REITs still have some ground to make up from their peak valuations of February 2007. For REITs, the bottom dropped out of the market in 2008 when they lost roughly 20% of their value. “There is still an extra 10% of lost ground that has to be made up from the liquidity crisis,” Case tells GlobeSt.com. For these reasons, he suspects REITs will continue their current growth trajectory.