Stable economic conditions and low vacancy rates bolstered investor confidence in REITs, which pushed up the performance of the leading composite stock index in the sector during the first quarter, according to the National Association of Real Estate Investment Trusts. Retail REITs were the top performers in the entire sector.

The NAREIT All REITs index gained 2.07 percent, which was ahead of the Russell 2000's 1.95 percent gain and the Nasdaq's 0.26 percent increase. The Dow Jones Industrial Average shed 0.9 percent and the broader S&P 500 clocked a 0.6 percent increase.

"In March 2007, the average daily dollar trading volume of REITs was $4.2 billion, compared with $2.3 billion in March 2006," NAREIT said in a statement. "Regional malls were the top-performing market segment in the first quarter, with a total return of 13.85 percent. Lodging REITs delivered a 7.74 percent total return."

The organization said the retail sector led the REIT industry with a return of 9.8 percent. "Retail REITs are benefiting from a stable economy, strong consumer spending and low vacancy rates," NAREIT said.

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