Apartment REITs That Could Come Out Winners

Real estate investment trusts that specialize in apartments have struggled in a tough housing market. But these four bargain-priced companies appear poised to succeed.

A dismal housing market hasn't done the apartment-rental market any favors. As houses and condos go unsold, accidental landlords trot out "For Rent" signs that compete with those of building owners. Yet still-lofty real estate prices in the best markets make it tough for the buyers of apartment buildings to strike a profitable deal. First-year rates of return on acquired properties have fallen to an abysmal 4% in some markets.

It's little wonder that real estate investment trusts -- portfolios of properties that trade like stocks -- that specialize in apartments are struggling. Last year, shares of apartment REITs returned 40%, according to the National Association of Real Estate Investment Trusts, and many were on a tear early in the year. But through April 30, apartment REITs were down 5.4% on average, while all property-owning REITs were up an average of 3.4%.

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Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.