From the November 2009 issue of Boomer Market Advisor • Subscribe!

REITs on the rise

By Mark Lamkin

So traded REITs are through the roof. During the third quarter, according to the Dow Jones Equity All REIT Index, they posted a 33 percent return. If you've learned nothing in the past 18 months, get your clients in now, quickly. From The Wall Street Journal:

"Share prices of real-estate investment trusts have climbed so far that according to some analysts, the sector is trading at a premium to the value of the underlying assets?for the first time since the heyday of the real-estate boom. To some stock pickers, that is one of several signs that REITs are overvalued and a correction is around the corner."

"They're actually up about 100 percent since March, and traded REITs, like the stock market, are forward-looking, so they're betting on a real estate rebound," adds Ron Kuykendall vice president of communications with the National Association of Real Estate Investment Trusts.

But where does this leave non-traded REITs, a vehicle many advisors see as especially appropriate for the boomer retirement portfolio?

"Harder to tell," Kuykendall says. "Information on traded REITs is obviously readily available throughout the day and after closing bell. Not so with non-traded REITs."

But Mark Lamkin, president of Louisville, Ky.-based Lamkin Wealth Management (and former Apprentice contestant) likes what he sees.

"With traded REITs you could be up 50 or 60 percent, or down 50 or 60 percent. It just shows you the volatility this type of asset class has," Lamkin says. "For baby boomers, volatility is not something they need right now. So non-traded REITs are a way to buffer some of that volatility and still get increased income for the client."

According to Lamkin, there's no bigger trend than baby boomer health care, so it's a sector with particular appeal.

"For pretty much all of the baby boomer clients that walk through our door, we'll put 5, 7 or 10 percent of their portfolio there. We wouldn't have said that three years ago, but because of market volatility, it's been an effective strategy for them."

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