As third-quarter reports roll along, banking, transportation and heavy industry companies have said the worst is behind them. Not so for real-estate investment trusts. Their comments on third-quarter results indicate few are ready to say the worst is over.

REITs, which operate commercial properties from office buildings to prisons, have diligently whittled down the leverage on their balance sheets and cut costs, while steeling for less access to capital and a slow revival of market demand.

'On the whole, market demand is well below that of a year ago,' said Liberty Property Trust chief operating officer Robert Fenza, 'Most tenants are renewing and are either staying the same or downsizing. Very few are expanding.'

Wall Street Journal