- The Washington Times - Thursday, September 18, 2003

Investors who have real estate stocks in their portfolios earn higher returns than those who don’t, according to a study that was commissioned by groups supporting commercial real estate investing.

Ibbotson Associates, a Chicago-based investment-research company, said that between 1987 and 2001, portfolios with investments in real estate properties and in real estate-oriented stocks earned as much as 0.27 percent more than those portfolios without a real estate component. So, a person with $1 million in investments could earn as much as $2,700 more if real estate investments are included.

Ibbotson said that both real estate stocks, including real estate investment trusts (REITs) are good investments on their own, but that returns were higher when investment in actual real estate was added to a portfolio. REITs alone added a 0.11 percent annual return to portfolios on average, while REITs and direct real estate combined added between 0.8 and 0.27 percent depending on the level of investment.

Full disclosure: The study was commissioned by the National Association of Real Estate Investment Trusts, which has lobbied hard for investors to buy REIT stocks and for employers to offer a REIT option in 401(k) plans. Ibbotson used the Nareit Equity Index to measure returns on real estate stocks. The Nareit Index has climbed about 17.7 percent this year, and the Morgan Stanley REIT Index — which is referenced more often by securities analysts — has risen about 22 percent.



FRIT sells 2 assets

Rockville-based Federal Realty Investment Trust sold two of its properties, raking in $17.3 million.

The company said it sold Coolidge Corner, a 13,000-square-foot building with eight retail tenants, for $8.2 million, or about $4.3 million more than what it paid in 1995. In addition, Federal Realty pulled in $9.8 million when it sold a 17.7-acre parcel of land in Hillboro, Ore. The company had bought the land in 2000 for $7.9 million with the intention of building a 425,000-square-foot mixed-use complex with specialty stores. But it abandoned that plan in March of last year.

Federal Realty executives said the two properties did not fit with the company’s business plan, and the extra cash will help it redevelop and expand properties it own.

“By disposing of assets that detract from the trust’s internal growth rate, we enhance our portfolio performance while generating significant proceeds to fuel future growth through acquisitions and redevelopment,” said Jeff Berkes, the company’s senior vice president and chief investment officer, in a press release.

Shares of Federal Realty closed yesterday at $36.55 and have risen nearly $8 this year.

In other news

• CIG International LLC gave $2.6 million to Metropolis Development for the construction of the Langston Lofts condominiums at 14th and V streets NW. The money is considered “mezzanine” funding, because it closes the gap between the builder’s capital needs and its bank loan.

• WEH Capitol, Galaxy 800 N. Capitol Owners and MDH Capitol paid $103 million for 800 North Capitol St. NW. The 10-story, 302,892-square-foot building is fully leased by the General Services Administration.

• Property Lines runs Fridays. Tim Lemke can be reached at [email protected] or 202/636-4836.

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