REITs Continue Strong Performance in First Quarter

CHARLOTTESVILLE, VA. — REITs continued their strong performance in the first quarter, finishing with a particularly strong performance during the month of March. The SNL Equity REIT Index ended the quarter at an all-time high, and posted a total return of 12.1% during the first quarter. This performance is of particular note as it follows the record return of 37.5% the index posted in 2003. REITs also continued to outperform broader market indexes: the S&P 500 and the Russell 3000 returned 1.3% and 2.2% respectively during the first quarter.

Among the individual property sectors, retail REITs delivered the strongest returns, with an index total return of 18.9% during the first quarter. Within the retail sector, the large mall companies again led the way with Simon Property Group (SPG) and General Growth Properties (GGP) posting quarterly returns of 27.6% and 27.4% respectively.

Healthcare REITs also had a solid quarter, with an index total return of 17.2%. Among the larger companies within the healthcare sector, Ventas (VTR) continued to outperform posting a quarterly return of 23.7%.

Renewed investor interest in the industrial REITs, particularly during the month of March, enabled this sector to outperform the SNL Equity REIT Index for the quarter. Total return for the industrial sector was 12.6%. Liberty Property Trust (LRY), the second largest industrial REIT, led the way with a total return of 18.2%.

Among the lagging property sectors, residential posted a total return of 4.6%. Of the larger companies in the sector, AvalonBay Communities (AVB) and Archstone-Smith Trust (ASN) were the strongest performers, returning 11.8% and 7.3% respectively. Apartment Investment and Management Company (AIV) was the weakest performer, with a total return of negative 8.7%. The bulk of this decline came in the month of March.

The office sector, relatively weak throughout most of 2003, had actually outperformed the SNL Equity REIT Index in the fourth quarter of 2003. However, it once again underperformed during the first quarter of 2004 with a total return of 9.5%. Among the larger companies, Boston Properties (BXP) and Duke Realty (DRE), which returned 13.9% and 12.7% respectively, led performance within the sector. Equity Office (EOP), the largest office company, posted a return of 1.6%.

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