Analysts David Shulman and David Harris write that, "With the current yield for quality companies generally in excess of 6%, a total return over the next year in excess of 10% seems like a more than reasonable expectation."

Big city office companies and those that own class B apartments should do well given the present economic conditions, while those that specialize in suburban offices or malls may face difficulties in 2002, they note. Occupancy and rental rates are expected to be below forecasts but the weaknesses in net operating income should be offset by refinancing of high-cost debt.

Shulman and Harris have lowered their earning estimates for several REITs and expect to reduce them for others as well, "but they will likely be measured in pennies and nickels rather then the dimes and quarters and even dollars we witness in other sectors of the economy," they write.