Real estate may have been a hot investment last year, but not for real estate investment trusts.

A lack of acquisitions in the commercial real estate market last year prevented companies from floating more stock, which, in turn, resulted in a mere 5% increase in net inflows to REITs, Prudential Real Estate Investors found. REITs took in $19.8 billion in 2002, up marginally from $18.8 billion the year before. By comparison, REITs took in $45.3 billion in 1997 and $38.4 billion in 1998.

"Despite relatively strong stock market performance, limited new equity was raised because the lack of buying opportunities in the current property markets provided little incentive for companies to issue new stock," said Youguo Liang, managing director of research at the Prudential division. "New capital is critical in an industry that cannot rely heavily on retained earnings for rapid growth."

And because REITs saw scant inflows, they did little to change the percentages of their various commercial holdings. The 7.6% ownership of offices in REIT portfolios remained unchanged from the year before, while their holdings of apartment buildings and warehouses fell minimally. The percentage of hotel holdings in REIT portfolios fell 1.6% to a total average of 14.6%, while retail mall holdings increased 2.5% to 36.3%.

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