Real estate investment trusts were among the hottest stocks of the year, propelled to their biggest gains in nearly a decade by low interest rates and an improving economy, the Wall Street Journal reported today. REITs, which own properties as diverse as office buildings, apartments and warehouses, are sensitive to changes in interest rates because many investors see them as an alternative to fixed-income investments like bonds. When interest rates fall, REITs look more attractive and vice versa. In 2015, a stronger economy and increased mergers-and-acquisitions activity could overshadow rate rises, helping to power REIT returns, analysts predict. If that turns out to be true, 2015 could be the first year since 2009 that REITs outperform the broader stock market even as rates rise. For 2014, real-estate stocks have produced a total return of 32.3 percent, including dividends, according to the FTSE Nareit Equity REITs Index, which tracks 148 property companies. That is the highest total return since 2006, the year before real-estate values peaked, when REITs returned 35 percent to investors.
