Few are aware of the colorful history of the real estate investment trust industry. Much of the mystery in the industry has to do with changes to company names and legal definitions of what a REIT actually is, thereby rendering the history to the realm of the forgotten.
A quick look at the REIT Share Price Index in 1979 (Brody, Michael. Sounder Ground. Barron’s. May 21, 1979. page 4.) should shed some light on an industry group that, from 1960 to December 1971, had experienced two jarring routs of –60% and –80%. The REIT Index below has not survived to the present as a majority of the companies (greater than 80%) simply don’t exist after their failure/bankruptcy or forced mergers.
The reasons for the decline in the period from 1972 to 1974 are many. Surprisingly, investment analysts at the time were simultaneously arguing that falling and rising interest rates were the threat to the REIT industry. As we enter a secular rising interest rate environment, REIT investors should check the foundation that their investments are build on.
see also: U.S. Realty: 1921-1939