Even as the stock market shows signs of life, now might not be the time to invest in REITs, which are down 21% for the year, Chris Palmeri writes in a Business Week commentary. Michael Kirby, director of research at Green St. Advisors, noted that REITs are yielding 5.5%, while corporate debt is yielding 7.8%. Meanwhile, commercial real estate could face more problems going forward.
The U.S. commercial real estate market has yet to feel significant effects from the economic downturn, according to Martha Peyton, managing director of strategy and research for global real estate with TIAA-CREF. Peyton, however, noted that job losses and an effect on the sector are inevitable. "The sooner this is resolved the better," she said.
REITs had been holding up well until the recent crash, when they fell along with most other stocks, Kiplinger.com Senior Editor Jeffrey R. Kosnett writes in a Washington Post commentary. "Now REITs look as vulnerable as other financial investments for the next few weeks, or until the credit panic fades," he said. Kosnett goes on to give overviews of some REITs that appear to be holding up well.
In this Wall Street Journal opinion piece, Federal Reserve Chairman Ben Bernanke writes that the economy and financial markets are facing complicated challenges, but that he believes policymakers are taking the necessary steps to meet those challenges. "I am not suggesting the way forward will be easy," Bernanke writes. "But the tools are in place to respond effectively and with force. ... Their application, together with the underlying power and resilience of the American economy, will help to restore confidence to our financial system and place our economy back on a path to vigorous growth."
Merrill Lynch raised $2.65 billion for a fund dedicated to investments in Asian real estate. It is the first fund dedicated to the sector by the bank, which is in the process of being acquired by Bank of America.