REITs finally taking a dive??

[ScaredtoQuit]

Has the long awaited correction in REIT's finally arrived? My REIT index fund at Vanguard (VGSIX) is flat for the year (Currently 25.48 vs 25.44 at Y.E. with a 15 cent dividend along the way) even though earlier in the year it was up almost 14% at one point. Anyone care to speculate?

 

[Eagle43]

Nope, but I listened to the wise ones on this forum. I moved more than I had invested out of VGFSIX into Target 2015. The target fund is up, and what remains of the REIT is down.

 

[kaudrey]

Sounds like a buying opportunity!

 

[dmpi]

The long overdue small cap correction is finally taking hold too. Some of these assets classes have been on a tear for so long; how much more upside can they possibly have left?

 

[Spanky]

Sounds like a buying opportunity!

Really? The current of 3.2% is significantly lower than the historical yield of 7%. It is plausible that income from property may go up to compensate the lower yield.

It may not be a bad time to bring your REIT allocation, if any, to its targeted balance.

 

[ScaredtoQuit]

My target is 10%. Right now the actual is 10.2%... not worth changing anything at the moment. However, I WOULD have made out by reallocating a few months ago when my actual percentage reached about 11.5%

 

[Sam]

Has the long awaited correction in REIT's finally arrived? My REIT index fund at Vanguard (VGSIX) is flat for the year ...

My Fidelity REIT (FRESX) is behaving almost identically. This is the one fund that I least understand. Kind of going against the common wisdom of "not investing in something you don't understand"

Edit to add:
Here's a recent article saying that REIT is still a good investment today, FWIW.
http://www.smartmoney.com/fundscreen/index.cfm?story=20070413

 

[FinallyRetired]

I have the TIAA Real Estate account, not a REIT, they own properties. Not everyone qualifies to hold it but if you do it has great returns:

Year to date 5.58%
1 year 14.99%
3 year 14.64%
5 year 11.08%
since inception 9.76%

I have about 15% in it and have to fight the urge to pour more into it, because as soon as I did it would tank

 

[kaudrey]

Really? The current of 3.2% is significantly lower than the historical yield of 7%. It is plausible that income from property may go up to compensate the lower yield.

It may not be a bad time to bring your REIT allocation, if any, to its targeted balance.

----

No, I don't really plan to buy more right now. My REIT allocation is around 5%, down from about 7-8%, and I won't add more for a while, I don't think.

Karen

 

[Freein05]

I buy REITS for income and if I get capital gains that is great. I sold two earlier this year and got a nice capital gain. I sold ithem because the yield at the current price had dropped below my target and I could move the money into other investments that were yielding better. I invest directly in REITS and study them just like a person would do on a any equity investment. I also save the mutual fund fee which also increases my return.

 

[Gone4Good]

Really? The current of 3.2% is significantly lower than the historical yield of 7%. It is plausible that income from property may go up to compensate the lower yield.

I strongly suspect the days where REITs yielded significantly more than treasuries are long gone, never to be seen again.

I market timed myself out of REITs a couple of years ago when I should have just stuck with my asset allocation.

 

[JustCurious]

The long overdue small cap correction is finally taking hold too. Some of these assets classes have been on a tear for so long; how much more upside can they possibly have left?

BRSIX is the smallest of the small cap, and it returned .99% for 1 year as of 4/30/07.
VFINX is the largest of the large cap, and it returned 15.07% for the same 1 year.

It seems that the small cap correction took hold some time ago, and the large cap stocks are on a tear.

 

[loosechickens]

we've sold most of our domestic REIT investments, although we kept one specializing in health care properties, but we have exposure to international REITS, which have been doing really well, especially in places like Singapore, etc. We had REITS back before they were cool, and did very well with them, but domestic REITS may be in for a rough ride at present. It was time to move on.

 

[dmpi]

BRSIX is the smallest of the small cap, and it returned .99% for 1 year as of 4/30/07.
VFINX is the largest of the large cap, and it returned 15.07% for the same 1 year.

It seems that the small cap correction took hold some time ago, and the large cap stocks are on a tear.

Well I guess that's true but I'm comparing the RUT2000 vs S&P500.

 

[JustCurious]

Well I guess that's true but I'm comparing the RUT2000 vs S&P500.

The 1 year return of the Russell 2000 index as of 4/30/07 was 7.83%.
The 1 year return of VFINX (SP500 index) for the same period was15.07%.

http://www.russell.com/Indexes/characteristics_fact_sheets/us/Russell_2000_Index.asp

http://finance.yahoo.com/q/pm?s=VFINX

 

[Hamlet]

My REITs have gotten hit pretty hard this year. I have a lot of 2nd tier REITs that yield more than the average (currently 5.5-6.6%).

FR, O, NNN, SNH are my REIT holdings. They've come down enough that I may add to them in my Roth next year if they are still down where they are at today.

 

[mathjak107]

im liking the fact i own a un-listed reit ,more and more . no daily fluctuations, no market perceptions sinking the stock and a nice income stream and potential capital gain at the end and so conservative in nature it goes in my income bucket not my stock bucket..

you get to own real bricks and morter and although there is a 6% fee you cant buy any real estate without closing costs anywhere.

i have to admit , being not very transparent as far as the goings ons or the worth of what you own i was very sceptical but took the plunge never expecting anything more than the income stream.

for what amounted to a charge of about 1% a year apple 2 the prior un-listed reit to the one i currently own now,which is apple vii ,spun off 7 to 8-1/4% even thru the low interest rates of the 2,000's
we just broke up and sold apple 2 off after 7 years for a whopping gain.

it worked out to an average gain of 17-1/2 % for 7 years including the income stream.

to tell you the truth if it was just the income stream at that rate thru the 2,000's in a money mkt rate world of under 1% i would have been happy to give up 1% a year but to actually make money on it was a surprise.

of course the past performance dosnt mean it will happen again but even if not the 8-1/2% and no daily fluctuations make me happy.

 

[chinaco]

I noticed that mine was down.

Oh well, wait for the carnage to finish and pick some up cheap!

I own some REITs embedded in my small cap fund.

But in REIT specific funds... I only have about 1.2% of the portfolio... not enough to make a difference yet. I have a target of about 5%... I am still re-balancing into the REIT (opportunistically).

If they tank... I am ready to pick up some bargains. From my perspective... I hope everyone heads for the door at once... I have some cash to put in play if the opportunity looks right. 8)

 

[mathjak107]

im getting really interested in icf or rwr again. maybe around 75.00 ill buy rwr

 

[CMAN]

Is anyone on the forum familiar with non-traded REITS? These are advocated by Ray Lucia on his show. His claim is that they will create an income stream (between 6 and 8 percent) with little market fluctuation.

 

[mathjak107]

im more than happy with the apple hospitality reits.

becareful some are nothing more than feeing you to death.

 

[Texas Proud]

Is anyone on the forum familiar with non-traded REITS? These are advocated by Ray Lucia on his show. His claim is that they will create an income stream (between 6 and 8 percent) with little market fluctuation.

That is a stupid statement....

it is not tradeable, so little market fluctuation means it does not get repriced like all the others, BUT IT REALLY DOES... if the market value of the assets goes down, the value of you REIT goes down... you just don't know it has... because you can not readily see it listed on an exchange.. but go and try to sell prior to the end and then tell me there is no fluctuation...

 

[mathjak107]

its not nearly as volatile though as the swings of reit stocks. stocks swing wildly more from perception of what will be than what is. the unlisted reits pay around 8-1/2% and in 7 years when its sold what you get will be based on the actual value of the sale.

 

[Spanky]

They lack liquidity and must be sold to the REIT company itself. Since REIT NAV generally fluctuates less than market price, the lack of liquidity may mitigate volatility in price. However, if you have to sell during a market downturn, the buyer may offer a price significantly discounted from the NAV.

 

[CMAN]

Thanks mathjak107,


That is my understanding. I am not seeing the wide swings that you see in traded REITS.