REITs Carry Momentum Into 2012

REITs continued to show strength during the first quarter of 2012 with total returns of 10.4, according to Brad Case, NAREIT's senior vice president of research and industry information.

In a video interview with REIT.com, Case discussed how the REIT market performed in the first quarter of the year.

"It was another strong quarter," he said. "It's actually a little bit less than the broad stock market gain, but that's to be expected, given that REITs have outperformed the broad stock market the last three years."

Some of the top performers from the first quarter of 2012 included the industrial, regional mall and lodging sectors.

"The industrial sector gained more than 25 percent during the quarter, and the regional malls and hotel sectors are very strong," Case said.

He attributes this strength to a growing confidence among investors that the broader economic expansion is going to continue. Case said that investors anticipate an increase in manufacturing and trading activity, which will translate into an increase in the demand for industrial space.

Additionally, he noted that investors are confident that travel for business purposes and vacations will increase, which will lead to a corresponding increase in the demand for hotel space.

The mortgage REIT sector also fared well in the first quarter, up 9.2 percent for the three-month period. Case attributed these gains to positive investor sentiment.

"I suspect that there's a growing confidence that the overall economy is going to generate the income that commercial mortgage borrowers need to make their mortgage payments going forward," he said. "So, there is a sense that there's less risk in that sector."