Following the drama of the U.S. real estate securities market in June, portfolio managers found relief in a long Fourth of July holiday weekend — when fireworks would be safely contained in the night sky. Equity REITs fell 11.4 percent in June, according to the FTSE NAREIT U.S. Real Estate Index Series.

According to Dean Frankel, a senior portfolio manager in the real estate securities group at Urdang, June 2008 was “the second-worst month we’ve seen since we’ve been in business.” He notes, “there was a negative 14.5 [percent] in April 2004, but down 11 [percent] was the worst single month since that.”

In fact, June’s decline was bigger than any single-month drop in 2007 — despite the turmoil last year caused by the meltdown in the subprime residential mortgage market. The drop put REITs into negative territory for the first half of 2008; the FTSE NAREIT equity REIT index recorded a 5.9 percent drop for the first six months of the year.

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