One of last year’s US success stories, real estate investment trusts, have hit the doldrums. So far this year, just two initial public offer...

One of last year’s US success stories, real estate investment trusts, have hit the doldrums. So far this year, just two initial public offerings of REITs based in the US have been completed, raising $735.6 million, according to Dealogic.

Last year REITs were one of the most active sectors of the US IPO market with 28 deals raising roughly $6.8 billion.

REIT stocks were among the highest performing sectors last year as falling long-term interest rates made real estate and REIT stocks attractive. Rising oil prices, strong jobs growth and other factors that could prompt higher interest rates have pushed down REIT stocks this year.

Last year the Morgan Stanley REIT index rose 31.5 per cent, but is only up around 2.6 per cent in 2005 and has actually been showing a loss for most of that time.

"Last year was a good year for REITs," said Carey Callaghan, an analyst for Goldman Sachs. "Those who were inclined to sell may have already gone."

Current appetite for REITS will be tested next week when hotel investor DiamondRock Hospitality is scheduled to launch a $309 million IPO.