FEB 2007 VOL. 2

Foreign Exchange

After years of legal wrangling, the United Kingdom REIT market got off the ground on January 2-and has proceeded to go nowhere but down. According to the Wall Street Journal, the problem may be that the British property firms that converted to REITs had run up so much in value prior to the Jan. 1 start of UK REIT trading that the shares had no more upside. According the Journal, shares of these companies (ranging from giant Land Securities to tiny Primary Health Properties) rose some 60% in the 15 months ending last Dec. 31. Between Jan 2., when trading commenced and Feb. 2, the FTSE EPRA/NAREIT UK REIT index fell 4% from $1,011.16 to $969.88-after hitting a low of $948.30 on Feb. 1.  (see chart)

Meanwhile, U.S. REITs racked up a strong January. The Dow Jones REIT Index rose from $265.74 on Jan 3. to $288.08 on Feb. 2, an increase of 8.4%.