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NEW YORK CITY-For the last month, the Morgan Stanley Real Estate Index (RMS) has been posting new all-time highs, closing last Friday at 403.99, up from its previous all-time high on June 21 of 398.62. As in weeks past, the RMS outperformed the major equity indexes. Year-to-date, it has provided a total return of 10.4% while the Dow Jones Industrial Average, the S&P 500 and the Nasdaq have been down 2.6%, 7.3% and 12.5%, respectively, according to the Bear Stearns REIT Monitor that appeared June 29.

The Monitor notes that it is difficult to say what is responsible for this upswing, although it speculates that several factors may be responsible. First, there is the possibility that REITs may be included in the S&P 500 index and second, changes to the Russell indexes at the end of 2Q may have had an impact on smaller cap firms. Also, changes to portfolios at the end of the second quarter may also have played a role.

Despite the new record, however, the 30-day trading volume for dedicated real estate mutual funds dropped slightly to 16.3 million shares from 16.4 million shares the week before. In addition, the average dividend yield for the RMS slipped to 6.71% from 6.80% the preceding week. During the same period, the spread over the S&P 500 moved down eight basis points to 544 bps while the spread over the 10-year Treasury fell from 168 bps to 130 bps.

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