From Sunday's New York Times:
Some REITs are more likely than others to weather a downturn and continue producing dividends and earnings. Finding them, however, may be more challenging these days, said John J. Stewart, an analyst at Credit Suisse, partly because REITs have become a more widely accepted asset class and therefore are more volatile than they used to be.
“You've got to be a bit more careful today when it comes to defensive investing in REITs,” Mr. Stewart said.
David Harris, a REIT analyst at Lehman Brothers, agreed. “It's kind of looking at who's the least worst,” he said in a recent interview.
In choosing the better REIT stocks, Mr. Harris said he looks at a company's balance sheet, particularly at the level of debt; the quality of its portfolio, especially property location; the dividend history; management experience; and the development pipeline. (In a downturn, the fewer projects in the works, the better.)