Some REITs Still Have Room to Run

Real estate remains a millstone for the economy as home sales languish despite historically low mortgage rates. But investors can still find some upside in the rental market.

Major apartment real estate investment trust stocks, or REITs, performed well during the second quarter. Many beat already high earnings expectations and offered stronger-than-expected guidance into 2011. Now, with conditions for REITs still improving, some could offer reassuring prospects in an uncertain equity market.

Rising rental rates, increased demand and small indications of rising confidence added up to better-than-expected second-quarter results for Apartment Investment Management (AIV: 21.31, -0.20, -0.92%), AvalonBay Communities (AVB: 101.34, -1.09, -1.06%), BRE Properties (BRE: 41.89, +0.05, +0.11%), Camden Property Trust (CPT: 46.31, -0.38, -0.81%), Equity Residential (EQR: 45.85, -0.06, -0.13%) and Post Properties (PPS: 26.02, -0.23, -0.87%). Although these stocks have climbed an average of 32% for the year-to-date and aren't exactly bargain buys, the sector still offers a promising medium-term outlook. (more)