As we approach the end of a tumultuous 2011, it's time to look back at the biggest winners and losers of the year.

So in this series, that's exactly what we're doing, sector by sector. Today, let's take a look at the biggest losers in the office real estate investment trust sector. First, the back story, then the results.

The back story
This year, we saw U.S. Treasuries get downgraded from AAA status while Congress played politics instead of fixing the budget, a domestic economy that has been recovering from its financial crisis in fits and starts, big trouble in Europe, and a Chinese economy that doesn't seem so bulletproof.

The daily volatility in the financial industry has been tremendous, but REITs haven't been swinging around as wildly as banks. Part of that is European debt fears manifesting in bank stock volatility, but the REITs have also been less volatile because of the dividend yields that are a hallmark of the sector. This is because a REIT has to pay out 90% of its taxable income in order to keep its favorable tax status.

Another thing to keep in mind with REITs is that most are heavily leveraged. As a result, any change in the Federal Reserve's actions to keep interest rates low could hurt future debt refinancings.

The 10 worst office REIT stocks of 2011
For context, the S&P 500 has returned 1.3% after dividends this year. In other words, the market has been basically flat.


2011 Dividend-Adjusted Return

Price-to-Tangible Book Value

Parkway Properties (NYSE: PKY) (42.1%) 1.6
Corporate Office Properties Trust (NYSE: OFC) (35.6%) 1.4
CommonWealth REIT (NYSE: CWH) (28.5%) 0.5
Franklin Street Properties (AMEX: FSP) (25.1%) 1.0
Mack-Cali Realty (NYSE: CLI) (14.8%) 1.2
Brandywine Realty Trust (NYSE: BDN) (13.2%) 0.8
Government Properties Income Trust (NYSE: GOV) (10.1%) 1.2
Piedmont Office Realty Trust (9.5%) 1.2
Hudson Pacific Properties (7.8%) 1.0
Alexandria Real Estate Equities (4.2%) 1.4

Source: S&P Capital IQ.

2011 hasn't been kind to these office REITs. This is despite current dividend yields that span from 2.8%-7.5%. So as you look at this list for investing ideas, remember that big dividends don't guarantee big returns.

Commercial real estate can be especially tricky in this environment, but we're seeing all of these REITs trading close to tangible book value. If you've got the time, know-how, and inclination, finding the hidden gems amid the rubble could be quite profitable.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.