Madison Square Capital - Competitors

Madison Square Capital Competition

Now Viewing Madison Square Capital's competition in: Real Estate Investment Trusts (REITs) (primary)

Recent Developments

Bad Year for REIT Industry - REITs in general had a bad 2007, bringing negative returns, while US major stock indices were positive. Returns on the All REIT Index declined 17.83 percent in 2007 compared to 2006, according to the National Association of Real Estate Investment Trusts. In contrast, the S&P 500 netted a positive 5.49 percent return; the Dow Jones Industrial Average, 6.43 percent; and NASDAQ, 9.81 percent. The REIT index includes corporations that trade on several stock exchanges.

Some REITs Thrive Investing in Securities with US-Backed Mortgages - Despite the mortgage and credit crisis, some US REITs thrived in fourth quarter 2007 and early 2008. MFA Mortgage Investments, Anworth Mortgage Asset, and Annaly Capital Management experienced significant sales, because they invest primarily in securities with mortgages backed by Fannie Mae and Freddie Mac, according to <i>The Wall Street Journal</i>. Government-backed mortgages are less risky than subprime loans.

Construction Trends Imply Varying REIT Opportunities - Annual construction trends indicate the health of various market segments and opportunities for REITs. US spending on residential construction declined 17.9 percent in 2007 compared to 2006, and outlay for religious buildings dropped 2.1 percent. In contrast, construction spending on offices increased 19.6 percent; education buildings, 14.5 percent; and healthcare facilities, 13.9 percent.

Competitive Landscape

The health of the economy drives demand for REITs as investment vehicles. Profitability depends on the value of the properties in the portfolio, which in turn highly depends on real estate vacancy rates. Large companies have advantages in deal-making, and economies of scale in marketing, computer and infrastructure investment, and operations. Smaller companies can compete by specializing not only in real estate type, but by geography, though geographic focus can increase risks.

Full Industry Overview For Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts (REITs) Industry Forecast

from Hoover's/D&B subsidiary First Research

The output of US real estate businesses, which includes REITs, is forecast to increase at an annual compounded rate of 4.7 percent between 2007 and 2012.

Real Estate Growth Steadies

First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.