WASHINGTON, DC—2015 has not been pretty for REITs. So far, they have more or less lost about 5% depending on the asset category.

As NAREIT, the industry's association reported recently, the S&P 500 and S&P 1500 outperformed the primary US REIT indices for the first six months, with S&P 500 delivering a 1.23% total return and the S&P Composite 1500 returning 1.56%.

Bringing up the rear -- the far, far back rear -- the total return of the FTSE NAREIT All REITs Index fell 5.24% for the same time period. The FTSE NAREIT All Equity REITs Index fell 5.44% and the FTSE NAREIT Mortgage REITs Index was down 5.09%.

So yes. REITs are having a rough time of it now. But a look at how far they have come over the past 15 years should assuage doubts that they are not built for the long haul.

50 Years And Counting

REITs' history stretches back much further than GlobeSt.com's own life -- which is the reason, incidentally, for this look back at commercial real estate capital markets this week: We are celebrating our 15 years as a publication.

As industry association NAREIT tells us, REITs were created in 1960 when then-President Dwight D. Eisenhower signed legislation creating a new real estate investment vehicle that would deliver regular income.

But REITs as we know them today came into their own with the passage of the REIT Modernization Act, signed by then-President Bill Clinton in 2001. That act laid out the structure we are familiar with: REIT were allowed to own up to 100% of the stock and, by lowering the distribution requirement to 90% from 95%, also allowed them greater flexibility to provide services to tenants and otherwise remain competitive.

The new distribution requirement, at the same time, was a small enough drop for REITs to retain what is most attractive about them to shareholders. "Strong, consistent dividend income is an important component of REIT performance," NAREIT CEO Steven A. Wechsler said. REITs have delivered in this respect. Last year listed REITs paid out $42 billion in dividends in 2014, up 35% from $34 billion paid out in 2013.

And so REITs took this particular legislative ball and ran with it: over the years they have expanded market share and expanded beyond the four standard food groups of retail, office, industrial and multifamily. The REIT Modernization Act, for instance, also opened the door to the formation of health care REITs and today some of the biggest REITs are in this category.

Along the way, self-storage, manufactured housing and timber joined the mix.

Many, Many Flavors of REITs

But in the last few years REITs have begun morphing and growing again -- this time without official imprint of an act of Congress.

Rather, it was a favorable nod from the Internal Revenue Service to companies that wanted to monetize their real estate assets that introduced separate but related trends: non traditional assets such as prisons, cell towers, farmland and digital billboards have applied for, and been given permission to convert to REIT form.

Spin Off Your Troubles

Another trend has been the propensity of troubled companies -- retailers in recent months -- to use the REIT structure to spin its way out of monetary difficulties. It hasn't always been a straightforward path for companies: many decided at the last moment that a better route is a sales leaseback. But the option for them is there.

Other companies without a hint of shade on their balance sheets also look to the structure for various reasons –- usually to focus on core assets while they give another set of shareholders a go at their noncore assets. Simon Property Group is one notable example.

And then there are those companies that may be less than thrilled that this avenue is available to them -- at least that is likely how they feel when activist shareholders step up the pressure for a spin off. Would anyone care to take bets on how Macy's executives are feeling at this moment about REITs' evolution?

This is a trend that has been playing out for a few years. A more recent trend is the way mortgage REITs, or mREITs, are positioning themselves to fill in a lending void. They are doing this because they see an opportunity and also because by diversifying they can continue to keep up the all-important dividends.

The Ironic Driver Behind the Diversification of mREITs

Ironically, another driver behind this trend are rising interest rates, according to a report by Kroll Bond Rating Agency. It cites recent moves by Annaly Capital Management as an example.

"As interest rates move up, the value of mortgage backed securities in the portfolio will go down," the report said. "Therefore, by diversifying into commercial real estate, Annaly, should be able to offset some of the challenges as interest rates begin to rise."

Another Taper Tantrum?

I say "ironically" because it is rising interest rates -- or the imminent prospect of them -- that are likely behind REITs' current poor performance.

Call it a variation of 2013's taper tantrum -- REITs' plunging values after then-chair of the Federal Reserve Bank Ben Bernanke said the Fed would soon begin tapering its quantitative easing. That, at least, is the opinion of NAREIT's Wechsler. REIT returns "were negatively impacted by investor expectations about the effect of rising interest rates on real estate and REIT share prices," he said.

Interest rate increases and decreases, of course, come and go depending on many factors such as the economy and rate of inflation. If REITs had a fight song to call their own it would be, to borrow one from an era a bit older than GlobeSt.com's own adolescence, Gloria Gaynor's 'I will survive."

Well, it would be more than that actually. Investors will adjust to a new interest rate environment and go back to REITs for the most fundamental of reasons -- their long-standing viability.

REITs, as this argument goes, benefit from strong growth because they can, among other things, raise their own rents. Ultimately they are a reflection of the greater economy and if it is doing well -- as rising rates would suggest -- then REITs will do well too. This argument was the reason behind the S&P Dow Jones Indices and MSCI to elevate real estate into its own asset class in the Global Industry Classification Standard structure. Starting in 2016 real estate will have its own classification and no longer be folded into the financial sector classification.

"Feedback from the annual GICS structural review confirmed that Real Estate is now viewed as a distinct asset class and is increasingly being incorporated separately into the strategic assets allocation of asset owners," said Remy Briand, managing director and Global Head Equity Research at MSCI, at the time of the announcement in 2014.

So REITs will not just survive but also thrive. In probably yet another form and sporting their own GICS classification to boot.