About five more real estate investment trusts are knocking on Standard & PoorÂ's door in the hopes of gaining entry into the prestigious S&P 500 index by year end, according to Goldman Sachs. The five - ProLogis, Vornado Realty Trust, Archstone-Smith Trust, Public Storage Inc. and Apartment Investment & Management Co. - appear to be the frontrunners to replace some of the companies no longer meeting index criteria.
With the S&P 500 down almost 30% in the first three quarters of 2002, more than 75 names have seen their market caps fall below $2 billion. REITs and S&P MidCap constituents are the groups most likely to benefit from potential openings.
REITs were admitted to the S&P 500 for the first time in October 2001, following years of lobbying. To date, only four names are in the index: Equity Office Properties Trust, Equity Residential, Plum Creek Timber Co. and Simon Property Group Inc.
S&P may increase its REIT weighting in the index to better reflect todayÂ's U.S. equity market when it starts dumping names that no longer meet its criteria. In general, companies added to the S&P 500 tend to enjoy greater prestige, higher liquidity and a surge in their stock prices as index investors snap up shares in the new companies to mirror the index.
If all five REITs were brought into the index, they would greatly raise the REITsÂ' profile and make fund managers pay greater attention to the group as they rejig their portfolios.
(source: Dow Jones Newswires)