WASHINGTON, DC-REITs are still proving their mettle in thiseconomic cycle, with the FTSE NAREIT Equity REIT Index delivering a14% total return through the first eight months of 2010. The FTSENAREIT All REITs Index delivered a 13.44% total return for the sameperiod and the FTSE NAREIT Mortgage REIT Index posted a 6.87%increase.

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By comparison, all of the other major market benchmarks wereunderwater for the first eight months of the year: the S&P 500,down by 4.62%; the Dow Jones Industrials, by 3.96%; the Russell2000, by 2.97%; and the NASDAQ Composite, by 6.84%.

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There are a couple of factors driving REITs right now, saysNAREIT’s general counsel, Brad Case. The main driver is that REITshave a competitive advantage with their access to the capitalmarkets, he tells GlobeSt.com. There is also this, he says: REITsstill have some ground to make up from their peak valuations ofFebruary 2007. For REITs, the bottom dropped out of the market in2008 when they lost roughly 20% of their value. “There is still anextra 10% of lost ground that has to be made up from the liquiditycrisis,” Case tells GlobeSt.com. For these reasons, he suspectsREITs will continue their current growth trajectory.

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Erika Morphy

Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.