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Stock prices on REITs were on the decline over the past couple of years. In 2007, the FTSE National Association of Real Estate Investment Trusts All REIT Index fell 17.83%, then saw an even steeper 37.34% slide last year. Lately, however, they’ve been rallying, an upturn driven in part by the REITs’ strong fund-raising abilities. But having taken wing, will REITs remain aloft? Fifty-nine percent of you feel the current REIT bounce-back won’t last long, while the other 41% believe the REIT rebound is here to stay. To Jan Swec, senior director with the REIT group at Fitch Ratings, the jury is still out.

“It’s hard to say how long this stock rally will last. Looking at the credit markets, it’s still very challenging. We do feel that it’s a positive sign that all of these REITs have been able to raise equity over the past several months. It’s really a validation of the REIT model that a lot of investors feel confident about the long-term prospects of these companies. But there will continue to be a lot of challenges in the commercial real estate market over the next several years.

“If you look at REITs versus the broader commercial real estate market, a lot of them are in a relatively better position because they’re able to access equity markets to raise capital. For the private market, it’s obviously very challenging to raise equity. But they’re still susceptible to the same debt market issues that everybody else is. There’s a lot less capacity for commercial real estate debt today, and the REITs are certainly feeling that as much as anybody.

“In terms of the REIT stock prices, the broader S&P 500 has been challenged, and I think people are uncertain as to where the overall economic environment is going. Some people are bullish while others are bearish. Unemployment continues to go up, and there have been a lot of negative signals in the economic environment, and obviously that’s going to be reflected in stock prices.”

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