Flows From REITs Slowly Ebbing

Investors cashed out of real estate investment trusts earlier this year, but with their fundamentals showing strength and the effects of the Federal Reserve’s latest half-point cut, flows out of REITs are slowing down, The Wall Street Journal reports.

Between Feb. 7 and Aug. 15, REITs fell 25.3%, according to SNL Financial, but because they have rallied since that low point, REITs are now down only 3.78% for the year.

Last week, the four-week moving average for flows out of REITs was $267 million, down from $349 million in the previous week.

David Harris, a REIT analyst at Lehman Brothers, calls the category the “comeback kids.”

“It’s still a good time to be a landlord,” said Michael Torres, chief executive of Adelante Capital Management, a real estate investment firm.

One specific type of REIT, healthcare REITs, which invest in assisted living facilities and nursing homes, fared particularly well in the third quarter. Their 11% rise in the quarter was partially fueled by oncoming retirement rush of Baby Boomers.