Analyst: REITs Should Yield 12%

The real estate investment trust sector should yield an overall return of 12% for 2004, according to David Fick, a managing director with Baltimore-based Legg Mason.Speaking at a real estate investment trust investing conference sponsored by the New York Society of Security Analysts, Mr. Fick said, "Let's not get crazy and start thrashing ourselves over a couple of weeks' losses." He was referring to the negative impact on the REIT sector of recent signs of a strengthening economy. The long-term outlook still remains good for REITs, he said, considering the increasing demand for the securities, and given that there are few alternatives, especially for income-oriented investors. Legg Mason has projected that about five REITs will go private, merge, or liquidate this year. A rising interest rate environment poses a risk for the sector, according to Mr. Fick, but he noted that historically there has been a low correlation between rising interest rates and negative effects on REITs.