S&P: Office REITs Poised for Limited Recovery

Office and industrial real estate investment trusts should be ready for growth when the economy rebounds, but the sector's recovery is likely to be limited, according to Standard & Poor's.S&P said it rates 20 real estate companies focused on office or industrial property, but that only 10% carry a negative outlook, in spite of tough operating conditions in most markets, and the rest have stable outlooks. Though poised for recovery when the economy improves, the office and industrial property sector "remains highly vulnerable to further economic weakness due to the lagging nature of cash flow streams for REITs," S&P said in its "industry report card" on North American office and industrial REITs. "In the near term, rental rate rolldowns will take a toll, and common dividends will be under pressure for many REITs in this sector." The rating agency can be found online at http://www.standardandpoors.com/ratings.