R E I T S Tank As Higher I R Environment Approaches

[Realistbear]

http://news.ft.com/cms/s/581847be-e9c3-11d...20abe49a01.html

FINANCIAL TIMES

Monday May 22 2006 .

Reits hit fresh lows on fears over rates

By Richard Beales and Chris Taylor in New York

Published: May 22 2006 20:02 | Last updated: May 22 2006 20:02

US real estate investment trust stocks are sinking towards their lows for the year as the latest bout of market jitters compounds worries over rising interest rates and softening property markets.

Reits, often seen as defensive stocks, have fallen more than 10 per cent since mid-March, under-performing broad market indices such as the S&P 500.

Sliding valuations in the sector echo other property market worries, illustrated on Monday by Lowe’s, the home improvement retailer, which cut its sales forecast for the rest of the year.

Lowe’s said the “moderating” US housing market could cause industry headwinds and saw its shares fall sharply in spite of strong first quarter earnings.

Matthew Ostrower, Reit analyst at Morgan Stanley, said the most recent Reit sell-off had been “remarkably indiscriminate”.

The financial markets are sending a signal: now is not the time to be in property.