WASHINGTON, DC-The monthly REIT returns tracked by the various indices and faithfully reported by the industry association NAREIT could almost be put on autopilot. Another month, another 30 or so days, in which REITs outperformed the general equity market. These latest returns, however, are of particular interest in the wake of the recent REIT portfolio acquisitions--namely Health Care REIT’s acquisition of JER Partners Genesis HealthCare portfolio for $2.4 billion and Ventas’ $7.4-billion purchase of Nationwide Health Properties.

Will these deals have a measurable impact on next month’s returns? They could very well, Brad Case, NAREIT vice president of research and industry information, tells me. Deals of this size mean a larger asset base and economies of scale that lead to improved property fundamentals. Even if these results are not immediately apparent, the market rewards the companies anyway.

In general, Case says, “REITs are now triple where they were from the bottom of the market. The reason their returns continue to be strong is that the market is recognizing their strengths--their access to capital and improving fundamentals.” More and more, he adds, investors are becoming convinced that a double-dip recession has been avoided, which is also spurring investment.

So far, this confidence has translated into an 8.9% increase in the FTSE NAREIT All Equity REITs Index and a 8.29% rise in the FTSE NAREIT All REITs Index for the first two months of 2011, compared to 5.88% for the S&P 500. In February, the FTSE NAREIT All Equity REITs Index was up 4.58% and the FTSE NAREIT All REITs Index was up 4.49% compared to the S&P 500’s 3.43% gain for the month.

The top performing sectors were timber, up 21.89% in the first two months of the year and up 4.10% in February; commercial financing, up 19.46% in the first two months and up 16.53% in February; and industrial, up 12.6% in the first two months and up 8.23% in February.