Goldman Sachs' REIT Update (DLR, BPO, ARE)

Goldman Sachs is out with a research report this morning, where it takes at recent trends in the REIT space and what it means for stocks in its coverage space. The analysts said that they expect more modest returns in the space in 2011 and are maintaining their Neutral view. They are forecasting a total return of 5-10%, slightly below the sector's longer-term average of roughly 10-12%. The analysts also noted that they see select opportunities to invest in REITs as market preferences shift from risk-aversion to a more pro-risk, pro-growth approach. Last year REITs delivered a well above average total return (+28.5%), principally driven by very favorable credit conditions and stabilizing fundamentals. Their top picks in the space are Digital Realty Trust DLR, Brookfield Properties Corporation BPO, and Alexandria Real Estate Equities ARE.