1. Income dependent investors have bid up REIT's to inflated levels recently as rates on T-bonds and MM accounts, etc, decline. Some REIT's now selling in excess of Net Asset Value based on the value of the underlying real estate, especially in the apartment and office sector. Higher vacancies have led to lower operating income and lower valuations in some cases. Question now is, have we reached bottom, or will there be further deterioration in these markets?
2. With the new tax bill, divs from conventional corps are more attractive (lower tax rates) and some are switching.
3. Downgrades by brokers. EQR downgraded or underweighted by CSFB, Deutche and JPMorgan recently -- evidence of problems in the apartment sector.