Читать книгу The Intelligent REIT Investor Guide - Brad Thomas - Страница 31

In the second half of the 1980s, REITs’ dividends had been rising faster than their earnings. Their stocks didn't suffer for it at the time, outperforming the S&P 500 in 1986 and 1987, and only slightly underperforming in 1985 and1988–89. But that changed the very next year as REIT share prices fell and fell hard.

That was quite the shock for their investors, who had only experienced one year of negative total returns between 1975 and 1990. That was in 1987, and they only dropped 3.6%. This time around though, they simply couldn't fight fate. The past overbuilding craze in office buildings and apartment communities finally caught up to them, no matter if they themselves hadn't participated in it. At the same time, the rise of Walmart and other discounters was beginning to encroach on traditional retailers and their landlords. Add to that their high payout ratios, which they themselves had encouraged and could no longer sustain, and a resulting round of dividend cuts. Combined, it was enough for investors to ditch greed as a motivator and let fear drive them instead.

REIT shares fell to unreasonable levels on that sentiment. Fortunately, they weren't a fledgling category anymore, and so the sector was able to bounce back by 1991. In fact, between 1991 and 1993, Nareit notes that their total annual returns averaged 23.3%. This was partially because they'd been so ridiculously undervalued and partially because they began aggressively taking advantage of the rest of the real estate world, which was still trying to emerge from its own bubble bursting back in 1986. That meant REITs were able to obtain properties at very good prices.

Speaking of that, the Federal Reserve was busy gradually lowering its interest rates to ease the shallow yet long recession the country had been stuck in. REITs benefited from that too, since their substantial dividend yields and ramped‐up earnings growth once again looked good to investors, who bought right in. The combined environment inspired a range of subsector‐specific IPOs, almost all of which were inspired by Nareit workshops. The trade association was spreading the word about its representatives to businesses, wealth managers, and legislators alike, and not only in the U.S. It went global too, holding more meetings in Paris, Frankfort, London, Edinburgh, Zurich, Amsterdam, Tokyo, and Singapore, sowing the seeds for REIT legislation around the world.

This is when U.S. REITs really came into their own in investor opinion. At the end of 1990, their market cap was estimated at $5.6 billion. By the close of 1994, it had risen to $38.8 billion. A year later, it was up to $60 billion – still a micro industry but a growing one nonetheless, with new subsectors such as malls, outlet centers, industrial properties, manufactured home communities, self‐storage properties, and hotels.

Plus, there were two new designations for REITs to take advantage of.