REITs “In the Late Innings”
As a broad category, Real Estate Investment Trusts (REITs) may be losing attractiveness as an investment, according to market analysts who suggest they’ve been “fully valued at least” and “in the late innings”. REITs tend to be sensitive to interest rates, are less appealing than the available alternatives in an improving market, and are pressured in their own sector by a resurgence of commercial-mortgage-backed securities.
Significant questions have also been raised by continuing SEC and state regulatory investigations of non-traded REITs. One example is the December 2012 complaint of Massachusetts regulators against LPL Financial which reviewed 597 transactions. The state found regulatory violations in 569 of them.