U.S REITs are subject to law that forces them to yield 90% of their net income to shareholders, therefore limiting their capital on hand. With limited cash, most REITs turn to financing in order to acquire new property, but financing has been difficult to obtain with the freeze on lending and credit from banks. Elizabeth Ody of Kiplinger states ,

"So REITs typically have to borrow to finance purchases of new property-usually, the more aggressive a REIT grows, the more money it needs to borrow. As credit markets have seized up, it’s become increasingly difficult for REITs to roll over debts as they become due."

Not only is the freeze on the credit market a large detriment, but so is the rest of the sour economy. As companies turn smaller and smaller profits, they either go out of business or restructure their obligations. REITs own a good amount of the property in which these companies occupy, and if they go out of business, they are vacating office space–a direct hit to a REIT’s revenue stream.

However, some believe that as the credit market recovers, so will REITs .

"Since mid November, credit markets have shown some signs of thawing. REITs have responded by performing better, to put it mildly: From November 20 through January 23, the REIT index gained 31%. As credit markets return to normality, REITs stand to benefit further."

2009 will be an interesting year for REITs.  Some groups within the industry will fare much better than others and the determining factor will be how the overall economy bounces back. If lending is opened and profits begin to come back, REITs will be a great investment option once again.