NEW YORK CITY-According to the NAREIT Composite Index, REITs gained 13.5% during the second quarter, while real estate stocks ended June with a year-to-date average total return of 4.9%. San Francisco-based REIT KKR Financial Corp. went public late last month raising approximately $800 million. The specialty finance company invests in residential, corporate, commercial loans and mortgage- and asset-backed securities. KKR Financial was organized in July 2004 and completed an initial private placement of shares common stock the following month. Since raising that initial capital, the company has invested approximately $6.3 billion.

According to Broadgate Consultants, institutional investors will either increase or maintain their investments in publicly traded REITs over the next 18 months, according to an overwhelming majority (90%) of buy side analysts and portfolio managers participating in a survey conducted in June. However, nearly half of the survey respondents said that REITs are not forthcoming with sufficient information to value certain income streams, such as those from joint ventures or partnerships, compared to other business segments.

"The good news is that there appears to be plenty of demand for REIT company shares among sophisticated institutional buyers," says Thomas C. Franco, Broadgate’s CEO. He adds that institutional investors will be looking much more carefully at individual REITs.