Are REITs Overvalued?
Having gained on average 12% this year, and 17% annually over the last five years, some investors are nervous about the future prospects for Real Estate Investment Trusts (REITs).
Indeed, in April, 2004 REITs suffered a 13% one month decline on fears of rising interest rates. That was the worst one month loss in more than two decades. Valuations have skyrocketed as well. Now, REITS on average trade at about 13 times their cash flows, compared to 11.5 times over the last 15 years.
Source: Wall Street Journal, September 17, 2004
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