REITs to outperform stocks: poll

For those investors still on the fence about putting their money in Real Estate Investment Trusts, they want to heed the advice of some of the industry’s heaviest hitters.

A poll taken at the BMO Capital Markets 10th Annual North American Real Estate Conference in Chicago revealed that industry participants predicted REITs to outperform the S&P 500 Index over the next 12 months, with 52 per cent of respondents expecting residential real estate to be the best performing subsector among REITs in 2015.

The poll, which solicited the input of 97 real estate industry leaders, revealed that 45 per cent of investors expected REITs to outperform the S&P 500 Index by more than three per cent in the next year; 35 per cent said it could outperform it by as much as 10 per cent.

Last year at this time, only 13 percent of respondents predicted the asset class to outperform the S&P.

Poll respondents expect the better performance to come in part as mainstream investors become more interested in the sector. It is poised to receive its own sector classification in the major market indices in the fall of 2016.

Sixty-five per cent of poll respondents said the new classification will help REITs draw more interest from mainstream investors. Presently, REITs are grouped under Financials.

“Corporate and investor attendees alike expect the flow of funds from mainstream investors to increase, albeit marginally, as a result of real estate obtaining its own (Global Industry Classification Standard),” said Paul Adornato, analyst for BMO Capital Markets.

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