REITs Avoid Wall Street Stomp by Lesley Hensell What could be the worst three-day weekend of the year for investors did little harm to REITs, which took only a light hit as Wall Street crashed and burned last Friday. Overall, REITs ended up down less than 1 percent on the day, remarkable considering the plunge taken by both the Dow Jones Industrial Average and the Nasdaq. The National Association of Real Estate Investment Trusts’ new Public Equity 100 index was down 1.4 percent, while equity REITs overall were down 0.8 percent. The only significant hit came in the mortgage and hybrid REIT categories. Mortgage REITs were down a little more than 2 1/2 percent, while hybrids were off a click more than 2 percent. Now for the good news. Believe it or not, REITs are better off on the year than most other asset categories. On the year, all REITs are up an average of 6 percent, with the Public Equity 100 up almost 7 percent. Look for some upside potential on the eventual overall market recovery for REIT share prices. After all, some of those tech stocks aren’t looking so attractive right now, especially with the Clinton Administration targeting anyone who gets a little too successful. Real estate equities may be an attractive alternative for frightened investors seeking a safe haven. And there’s no doubt a recovery will come quickly – investors just saw the day before the tax man visited as a good time to outrun inflation fears and take some of the exceptional gains they’ve earned over the last few months buying on the downside. Speaking of the downside, the jig is up at JDN Realty Corporation (NYSE: JDN). Through ever-worsening conditions, the company had managed to hang on to a revolving line of credit to keep the doors open. But now, JDN has announced that its access to credit has been terminated by the bank. JDN stock now is near its year-low of $8 per share. If you’ve got some of this issue, bail ASAP. By the time the lawyers are through with the embattled shopping center owner, you won’t be able to give away your shares. The company’s banks had agreed in early March to provide JDN to an unsecured line of credit despite default. Now, JDN says it is looking for a financial advisor to provide advice on “alternative” ways to finance the faltering businesses. This may be tough, since the banks have the right to demand payment of all outstanding debts at any time. This may have been an unlikely scenario when the JDN saga began in February. But now that the company has said it must restate financial results for the years 1994 through 1998 – to the detriment of investors – I wouldn’t doubt it if the bankers pulled the plug. After all, nobody likes being lied to. | 
