Recent Performance

The long/short REIT strategy of Boxwood Capital Research continues to outperform. As a whole, U.S. REITs rebounded in the second quarter of 2009 with the FTSE NAREIT Index rising 22.7% and the MSCI US REIT Index (aka RMS) up 15.6%. Much of this updraft occurred in April when federal government stimulus caused much of the financial sector to rebound. Through the first six months of the year, FTSE NAREIT actually returned –15.9%, and RMS –15.0%.

Meanwhile, Boxwood´s market-neutral U.S. REIT performance continues to post stable, positive results, returning 39.8% over the last three months and 16.4% so far this year.

Boxwood Capital Research's model hedges risk by quantitatively selecting both long and short stocks in the REIT universe using a wide array of real estate, market and financial indicators. The portfolio is designed to have relatively low volatility and correlation (beta) to overall REIT markets. As such, Boxwood's REIT portfolio is expected to generate positive returns regardless of overall market direction.

The first graph illustrates this point. It depicts the rolling, 12-month cumulative return of our stock selections, or Boxwood's Scores, compared against the performance of two common indices, the RMS and DJIA Index. Boxwood Capital Research's cumulative return over the last 12 months is +19.3% versus –48.7% and –28.4% for the RMS and DJIA Index, respectively.

As a result, Boxwood's cumulative returns have beaten the RMS by 68% over the previous 12-month period. Note, too, from the trajectory of the trend line that the volatility of our returns is also far lower than the other indices.

The second graph shows comparative returns on a monthly basis dating back to early 2007. Note in particular the positive impact of our hedging strategy that frequently produces gains in months when the benchmark indices show respective losses.