As it turned out in 2003, healthcare REITs led the pack in returns with 56%, followed by retail REITs, which closed the year at 47.5%. Investor sentiment and the resolution of certain issues surrounding Medicare payment helped put the healthcare sector at the top, while enclosed mall properties kept the retail sector well above water. Office REITs were successful as well, returning a total of 33.4%, and multifamily REITs returned a total of 25.6%.

As for what the New Year will bring, SNL officials believe strong investor interest in REITs is likely to hold steady, at least in the first few months of the year, but the status beyond the first quarter may not be as rosy. "There is now concern about REIT valuations in some quarters," SNL real estate senior analyst and editor Keith Pomroy says.