Given the drop in overall REIT performance, Courtney says, his firm is slightly underweighted to REITs with about 5% of clients' assets invested. Not surprisingly, Romano sees economic trends that he believes will boost the performance of REITs overall.
"If you look at commercial real estate in particular, not a lot has been built," Romano says. "One of the benefits of the credit crisis is that supply is at historically low levels. ... If that continues, we'll see demand [for real estate and REITs] pick up."
He points to the marked increase in rental prices as evidence. "If you look at their access and cost to capital," Romano notes, "the equity market is open to them and that capital can be deployed by buying new assets on an accretive basis. We think the potential to grow is pretty visible and pretty strong right now."
Time will tell if he's right. "What does the future look like?" Boyle asks. "I argue that it can't possibly have the run it's just had but, given my youth, perhaps I will be surprised."