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NEW YORK, April 6 (Reuters) - Shares of real estate investment trusts were pounded on Tuesday as higher interest rates made the trusts' dividends less appealing, sending investors fleeing.

Health care real estate investment trusts (REITs), mall REITS, office REITS, entertainment REITS and lodging REITS were among the top percentage and net losers in mid-afternoon trading on the New York Stock Exchange.

Shares of LTC Properties Inc. (nyse: LTC - news - people) were down $1.70, about 10 percent, to $15.83. Shares of Alexander's Inc. (nyse: ALX - news - people) fell $4.30, or about 3 percent to $159.65. LaSalle Hotels Properties Inc. (nyse: LHO - news - people) were off 94 cents or 4 percent to $23.00. CenterPoint Properties Trust (nyse: CNT - news - people) were off $3.31, or more than 4 percent to $75.79. Developers Diversified Realty Corp. (nyse: DDR - news - people) were down $2.91, or 7 percent to $36.31. Shares of Macerich Co. (nyse: MAC - news - people) were off $3.09, nearly 6 percent, to $47.61.

Overall the NAREIT Real-Time Market Index was off 3.7 percent, while the Morgan Stanley REIT Index fell <.RMS> 3.9 percent.

"There's a contingent of investors looking at REITS as very similar to bonds," said Credit Lyonnais analyst Bryan Maher. "That's not a terribly mistaken thing to do, to some extent. As interest rates go up the attractiveness of dividends that REITs pay are going to go down."

Interest rates started rising last week after a report showed that U.S. employment in March rose unexpectedly to its fastest pace in four years.

REIT stocks have enjoyed a strong run for nearly 18-months with the NARIET Index up 37.1 percent in 2003 and 7.6 percent since the start of the year.

"Our take on it all is that it is just a natural correction that's overdue," said Jon Fosheim, Green Street co-founder.

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