WASHINGTON, DC-REITs have underperformed thelarger stock market in August and September.For the first nine months of 2012, however, REIT returns kept pacewith the broader market. The reasons for the slowdown in August andSeptember are simple, Brad Case, NAREIT’ssenior vice president of research and industry, tellsGlobeSt.com: One, even in bull cycles—which REITs are in rightnow—there will be one or two off months. Another reason, he says,is the relatively early recovery of the commercial real estatemarket. “People became optimistic about CRE before they becameoptimistic about other parts of economy.” Now the rest of themarket is catching up, he says.

Of course that doesn’t assuage REIT investors interested in theshort term: on a total return basis, the FTSE NAREIT AllREITs Index was up 1.85% and theFTSE NAREIT All Equity REITs Index was up1.03% in the third quarter compared to6.35% for the S&P 500.

On the other hand, NAREIT also reports that for the first ninemonths of the year, the FTSE NAREIT All REITs Index was up 17.57%and the FTSE NAREIT All Equity REITs Index was up 16.09% comparedto 16.44% for the S&P 500. For the 12 months ended September30, the FTSE NAREIT All REITs Index was up 34.37% and the FTSENAREIT All Equity REITs Index was up 33.81%, while the S&P 500was up 30.20%.