REITs - Real Estate Investment Trusts - Info & Discussion: REITs and the S&P500

» RhyneN - REITs and the S&P500

The August 25th edition of Barrons discusses the possible addition of some REITs to the S&P500 index. Some years ago, those who determine the index decided that REITs were not operating businesses and chose to exclude them from the S&P500 index.

Because of several tax law changes that allow REITs to be more like operating business, the question is being re-reviewed and a decision is expected in September or October.

A decision to include REITs would cause significant buying of those REITs selected to be included. The article indicates that REITs would likely occupy 70 basis points of the index.

The three largest REITs measured by market cap are EOP, in office buildings, EQR, in apartments, and SPG, in retail malls. Based on July 18th values, they made up 9.575%, 5.685%, and 3.827%, respectively, of the Morgan Stanley REIT Index.

This helps explain the recent strength of these three stocks.

Other REITs with large market caps are PLD, an industrial REIT, BXP, an office REIT, and PSA, in self-storage.These three made up 2.965%, 2.712%, and 2.696% of the RMS at July 18.

-- posted by RhyneN