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ORLANDO-Investors are taking a second look at the whole range of real estate investment trusts now that most money market fund interest rates are down to the 3.5% to 4% level after offering average 6% returns for the past 18 months, real estate industry sources tell GlobeSt.com.

Charles Bissell, managing director, Integra Realty Resources, Dallas, tells GlobeSt.com Southwest Bureau Chief Connie Gore he sees REITs as “a safe harbor” for money coming out of drooping tech stocks. REIT stock prices and returns aren’t near their peak or historical highs, “but as long as tech stocks and telecommunications stocks continue to take a bath, we’ll see continued growth in REITs,” Bissell says.

Craig Prophet, vice president, Lend Lease Rosen Real Estate Securities, Berkeley, CA, tells Gore REITs are popular again because most have improved their image. “It’s not a new phenomenon,” he says. “It’s only new in the sense that (most) REITs never had this level of high-quality real estate and high-quality management” in their startup 1980s days.

Texas-based REITs with Texas holdings are holding up, often surpassing other regional REITs in stock prices and returns, Prophet says.

In Central Florida, George D. Livingston, founder/chairman, Realvest Partners Inc., Maitland, FL and a member of GlobeSt.com’s editorial advisory board, agrees REITs are again proving themselves to be sound investments.

“REITs have shown an excellent return and beat the (stock) market over the last year,” he notes. “This is an indication of better things to come.”

Livingston feels REITs are attracting investors again because “real estate demand, though generally slower, remains at a desirably high level” in most major markets.

“National polls and the press tell us most Americans believe we are either in a recession or about to enter one,” the developer says. “This has driven real estate cap rates higher and buyers have withdrawn from the market.”

Livingston feels this scenario puts REITs in a favorable growth position.

“Because buyers are less active nationwide, strong rent growth has slowed somewhat and local market conditions mirror that trend,” the developer says. “But Central Florida’s low construction rate is generating supply and demand imbalances that are favorable to investors.”

Livingston says “increased demand will push rents higher almost immediately once the economic cycle shows positive signs” again.

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