Some feel that this plan will have a negative impact on REITs. I disagree.

Whatever the legislative outcome, dividends from publicly traded real estate companies will continue to far exceed those of other equities. Few companies can–or will–approach the income generation of REITs (which were yielding 7.6 percent on average compared with 1.9 percent for stocks in the S&P 500, as of January 31). Even if taxes on dividends are eliminated altogether, REIT yields on an after-tax basis are likely to be well more than double that of other equities. Further, for tax-exempt investors the proposal will have no impact and REIT dividends will be fully four times the average S&P dividend.

And we haven’t even begun to talk about the stability and diversification benefits of investing in real estate stocks.

Impressive performance in the last three years–and over the course of the last three decades–underscores the value of including real estate stocks in a diversified portfolio. Further, I believe that as the President’s plan focuses attention on dividends, that spotlight will reinforce the high income stream and reliability of REITs.

I support the President’s economic aims. Any plan that manages to revive the economy and put us on track for long-term economic growth will also be good for real estate. Importantly, I do not see anything in the proposal that will detract from the strength of real estate stocks as an investment alternative.

As I write this column there is a far more important topic at hand. And that is the war against terrorism and the impending threat of war with Iraq. All our thoughts are with President Bush and our national leaders, our troops overseas and all those who may be affected. No matter how long or difficult the struggle, America will persevere.

Steven Roth
NAREIT Chair
Chairman and CEO,
Vornado Realty Trust