The momentum may be short-lived as commercial-property values are expected to sink further.

A Dow Jones index of U.S. equity REITs posted a 1.4% gain in total return for quarter, outpacing the 9.4% decline in the Standard & Poor's 500-stock index. Among the strongest were REITs that rent storage space, including U-Store-It Trust with a 26% gain. The total return for the entire category was up 20%.

Among apartment owners, one of the best-performing stocks was UDR Inc., which posted a total return of 25.7% compared to 11.5% for the entire category. Mortgage REITs, not surprisingly, posted a decline of 23%.

Both apartments and self storage are benefiting as people move to rental units from larger houses they no longer can afford. "The simple logic there is that as people downsize their housing, they need some place to store their stuff," said Mike Kirby, director of research for investment-research firm Green Street Advisors.

That a 1.4% rally would mark progress for the REIT industry is remarkable, given that the index posted a nearly threefold gain from 2002 to 2006, as the then-surging economy provided waves of tenants and cheap financing. Last year brought a rough tumble back to earth, with the index falling 16% as fallout from the subprime-lending crisis pummeled many property stocks.

Some say the industry's newfound resilience indicates investors are turning to hard assets and predictable cash flows despite a growing concern about REITs' liquidity in the increasingly miserly capital markets. "To me, it's a flight to safety, to a tangible asset class with cash flows that have low volatility," said Jon Cheigh, a portfolio manager at REIT investor Cohen & Steers Inc. in New York.

Where REIT stocks go from here, though, is another matter. A primary tool for gauging the value of a given REIT stock -- net asset value -- has become more difficult for analysts and investors to calculate because fewer property sales are occurring these days against which to benchmark those values. With those calculations less reliable, investors have less certainty that stocks are trading in line with declining property values.

Analysts often calculate net asset values by dividing net operating income generated by a REIT's properties by a capitalization-rate figure -- or the value of its income stream -- derived from recent sales of similar properties. The net asset value represents the price a REIT would fetch for its properties if they were sold that day. REIT stocks are then gauged on whether they are trading for more or less than that per-share net asset value.

Green Street Advisors, of Newport Beach, Calif., estimates that REITs on average now trade at a 9% discount to their net asset values. Traditionally, they trade at a 4% surplus on average. Various REIT categories are faring worse than the overall average, with mall REITs trading at a 32% discount, office REITs at a 15% discount and apartment REITs at a 13% discount, according to Green Street.

With far fewer property sales occurring these days to influence those figures, it's possible that those calculations don't capture the full extent of the property-value declines occurring. Office-property sales in February were off 95% from the same month a year ago, retail-property sales were down 88% and industrial-property sales down 50%, according to Real Capital Analytics, a New York real estate-research group. Investors have pushed down REIT shares to a level where they think the net asset values will eventually tumble. "We think commercial-property values are in the process of [falling] by 20% or maybe a bit more, and the physical market is probably halfway through that process," said David Harris, a REIT analyst with Lehman Brothers in New York.

Certain measures of REITs' strength will suffer if the economy remains dour. Debt-rating firm Fitch Inc. describes the REIT industry's access to capital as "adequate but weakening," noting that REITs collectively had used more than 39% of their credit lines from lenders as of Dec. 31, up from 35% a year earlier. Some say REIT stocks have further to fall, last quarter's rally notwithstanding. "I'm not so sure this rally is going to persist," Green Street's Mr. Kirby says.

Eight of the top 10 performers last quarter by way of total returns -- a combination of stock-price appreciation and dividends -- were apartment or self-storage REITs. Providing the momentum is investors' optimism that the ranks of potential apartment renters will swell as people are forced out of foreclosed homes and many need to store their excess belongings. Apartment REITs can borrow from government-backed lenders Fannie Mae and Freddie Mac, a stable source of capital unavailable to other REIT classes.

Among the quarter's poorest performers as a class were mortgage REITs, which registered a 23% loss, and hotel REITs, down 7%. Mortgage REITs have suffered as financing markets have dried up. Hotel REIT stocks have declined as investors fear the faltering economy will curtail corporate and leisure travel plans.