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A Defensive Strategy for REIT Investors

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From Sunday's New York Times:

Some REITs are more likely than others to weather a downturn and continue producing dividends and earnings. Finding them, however, may be more challenging these days, said John J. Stewart, an analyst at Credit Suisse, partly because REITs have become a more widely accepted asset class and therefore are more volatile than they used to be.

“You've got to be a bit more careful today when it comes to defensive investing in REITs,” Mr. Stewart said.

David Harris, a REIT analyst at Lehman Brothers, agreed. “It's kind of looking at who's the least worst,” he said in a recent interview.

In choosing the better REIT stocks, Mr. Harris said he looks at a company's balance sheet, particularly at the level of debt; the quality of its portfolio, especially property location; the dividend history; management experience; and the development pipeline. (In a downturn, the fewer projects in the works, the better.)

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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