The JPMorgan U.S. Real Estate Fund is beating the Standard & Poor’s 500 Index for a seventh straight year.
The takeovers of real estate investment trusts, including Chicago-based Trizec Properties Inc. and Shurgard Storage Centers Inc. in Seattle, propelled the JPMorgan fund to a 30 percent gain in 2006, topping the S&P 500’s 13.5 percent advance. The fund avoids homebuilders
Rising rents are key.
Bedell is now focusing on REITs of offices and apartments because rents are rising in metropolitan regions such as New York and San Francisco.
{ 2 comments… read them below or add one }
mrd 11.18.06 at 3:16 pm
It is not possible to make 20% a year in residential real estate for too many years in a row, unless it is accompanied by about 15% inflation.
The fact that rents are rising should cause concerns for anyone that wishes to have the Fed cut rates. The inflation numbers that the fed looks at do NOT include the cost of a home (I think this change in how housing inflation is dealt with happened in the 70s). The inflation numbers include rents that are being paid. This means that inflation in the cost of homes is not seen by the Fed until the inflated cost is felt in rents.
Also, rents can only go so high before the renters must demand more money from their employers.
John L. Wake 11.18.06 at 4:42 pm
You make some good points.
I don’t know much about REITs (real estate investment trusts). My impression was they were not good investments.
Nevertheless, after reading the article, I would like to get up to speed on them.