Barron's: European REITs

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From Barron's 2-19-07:

"Investors were thrilled by the average 45% rise in the shares of a group of property stocks on the London Stock Exchange last year. The stocks all had one thing in common: a plan to embrace the status of real-estate investment trust, as each has done in the past month. That's a testament to the strong outlook for REITs in the U.K. and the rest of Europe, where they are still somewhat of a novelty."

In the U.S., the REIT sector has outperformed the S&P 500 over the past seven years. But European authorities have just recently made tax-law changes that allow the trusts' creation. These REITs aren't obliged to pay taxes on their income because they are required to pass much of it along to shareholders. Hence, they offer dividends much higher than what they could as non-REITs."

"Under the new regulations, 90% of U.K. REITs' rental income must be distributed to investors. As dividend yields grow, this is likely to attract more money from abroad."

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