Housing may be nearing a bottom but commercial real estate likely has much further to fall – which could end a rally in REIT stocks.

REITs have seen their shares rocket 60% since hitting an 18-year low on 6 March.

REITs face at least two years of crushing debt maturities, sliding property values, dwindling occupancy and weakening earnings.

A lot of the current market rebound stems from relief that the dire forecasts for REITs in late 2008 and early 2009 didn't come true.

But those moves mightn't be enough in light of the challenges ahead. 'Additional shocks are coming over the next six to 12 months,' says Robert Arnott, chairman of financial strategy firm Research Affiliates.

Wall Street Journal