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2006 marked another strong year for the performance of Real Estate Investment Trusts, according to the National Association of Real Estate Investment Trusts (NAREIT).
The U.S. REIT index delivered a total return of 34.35 percent for 2006, which means it outperformed all other major U.S. equity market benchmarks for the seventh straight year, according to NAREIT.
NAREIT said the 2006 performance of the FTSE NAREIT All REITs Index exceeded the S&P 500 at 15.79 percent, the Dow Jones Industrials at 16.29 percent, the Russell 2000 at 18.37 percent and the NASDAQ Composite at 9.52 percent.
Strong fundamentals across all sectors of the U.S. commercial real estate economy; increasing portfolio allocations to commercial real estate through REITs, especially among large institutional investors; a number of mergers and acquisitions; and steady economic growth fueled the industry’s performance over the past year, NAREIT said.
Top-performing REIT industry sectors and their total returns for 2006 included the Office segment, at 45.22 percent; Health Care, at 44.55 percent; Self-Storage, at 40.95 percent; and Apartments at 39.95 percent.
According to the association, the office segment benefited from steady economic growth, which increased employment and demand for office space, coupled with limited new construction, as well as significant acquisition activity.
The health care sector continued to benefit from the aging demographic profile of the nation's population, producing demand for the senior housing and medical care facilities provided by the companies in the sector.