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Chart of the Week (3/9)

Chart of the Week (3/9)

It is no secret that Retail REITs have taken a pummeling since market capitalizations peaked in February 2007. The extent of the contraction has been greater than broader stock market metrics. The price index on retail REITs is now at its lowest point—81.14--since the FTSE NAREIT index began in 1993. It dropped from 104.42 at the end of January to its new low at the end of February. It is below 100 (where 100 equals prices as of December 1993) for the first time since December 2000. At its peak, the price index hit 363.25 in February 2007.

The return index looks better. It is at 216.82. That’s the lowest point since November 2001, but well above the 96.25 the index hit in November 1994. (That index peaked at 878.58 in April 2007.) The recent drop in both indexes is a reflection of the broader market contraction as well as reflective of the decision by some REITs to take advantage of an IRS ruling allowing them to pay out dividends as stock rather than cash in 2009.

The silver lining? Dividend yields on the sector are now 10.34 percent. Recent months mark the highest dividend yields since NAREIT began tracking data in 1993.

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