The Markets October 6, 2010

U.S. REITs See Better 2010 Return than Broader Equity Market

Real Estate Investment Trust (REIT) returns were nearly five times greater than those of the broader U.S. equity market in the first three quarters of 2010.
Reported by

According to the National Association of Real Estate Investment Trusts (NAREIT), the FTSE NAREIT Equity REIT Index delivered a 19.1%-total return and the FTSE NAREIT All REITs Index delivered an 18.5%-total return for the period, compared to 3.89% for the S&P 500. On a 12-month basis ended September 30, REITs nearly tripled the returns of the broader market, with the FTSE NAREIT Equity REIT Index delivering a 30.28%-total return and the FTSE NAREIT All REITs Index delivering 28.27%, compared to 10.16% for the S&P 500.  

A NAREIT news release said the Apartments sector was the top performing segment of the U.S. REIT market in the first nine months of the year with a 32.83%-total return. Other top performing segments were Free-Standing Retail facilities, up 29.99%; Diversified REITs, up 23.07%; Self-Storage REITs, up 22.34%; Regional Malls, up 21.86%; and Lodging/Resorts, up 19.12%.  

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REITs also performed well for yield-seeking investors in the first nine months of the year, according to the announcement. The cash dividend yield of the FTSE NAREIT All REITs Index on September 30 was 4.55%, and the cash dividend yield of the FTSE NAREIT Equity REIT Index was 3.78%, compared to a 2.52% yield for 10-year U.S. Treasuries and 2.03% for the S&P 500.  

NAREIT said a primary factor driving the share performance of REITs is the fact that the REIT industry significantly recapitalized itself through its access to the public equity and debt markets in 2009 and through the first nine months of this year – sources of capital that were unavailable to private equity real estate funds.  

REITs raised $34.7 billion in 130 equity and debt offerings in 2009 and $32.5 billion in 131 offerings through the first nine months of this year, including $14.9 billion this year in 69 secondary equity offerings and another $1.6 billion in eight IPOs. REITs have used the proceeds of the offerings to pay down debt and begin to make strategic acquisitions of properties. The debt ratio of the FTSE NAREIT Equity REIT Index (debt as a percentage of total market capitalization) currently stands at 43.5%, down approximately one-third from 66.3% at the REIT market’s trough in March 2009. 

Deals & People October 6, 2010

Connecticut Expands 529 to Include Adviser-Sold Plans

The State Treasurer announced today that The Hartford will manage the first adviser-sold 529 college savings plan through the “CHET Advisor” program.   
Reported by

The Connecticut Higher Education Trust (CHET) was first set-up in 1998, with TIAA-CREF managing direct-sold plans; it will continue to do so. Now, state residents also have the option of an adviser-sold plan, offered through The Hartford.  Connecticut State Treasurer Denise L. Nappier said it was a competitive bid process, but The Hartford was selected to manage the new “CHET Advisor” program because of its commitment to education in its home state.

“The launch of CHET Advisor is an exciting opportunity for those saving for college in our state,” said Treasurer Nappier. “Financial advisers in Connecticut now have a home state 529 plan to use when helping families plan for college, and we’ve provided this important option by partnering with The Hartford, a company with a longstanding commitment to its Connecticut roots.”

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CHET Advisor will provide state-tax benefits to residents of Connecticut, including:

  • A Connecticut income tax deduction for contributions of up to $5,000 per year ($10,000 for married couples filing jointly)
  • Tax-free accumulation of earnings
  • Tax-exempt distributions for eligible education expenses.

Program details, including investment options and Disclosure Booklet, are available on the college savings page at www.HartfordInvestor.com.

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