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TWST: What would you be recommending to an institutional investor looking to get involved in the real estate sector? Which of those four avenues offers the most interest?

Mr. Marcus: It's always difficult for a Corporate Financier to try and speculate where the bid activity will come from, because obviously I'm party to a lot of information that, say, our analysts wouldn't be. That being said, I think there's two ways you can go. If the institutional equity investor still believes he wants exposure to real estate, he can do it in two ways: he can participate in indirect form through the listed sector or he can do it in direct form.

TWST: So for an investor the stocks to follow are these co-locators, the property companies that are providing co-location services and facilities?

Mr. Marcus: Yes, companies that are bringing together the real estate and technology can enhance the returns they can generate from their real estate.

TWST: What sort of rate of return is a benchmark norm?

Mr. Marcus: That's very difficult to say. Wearing a hat as I do as a principle investor in real estate, we wouldn't consider an investment for less than a 20%-plus return. An institutional investor buying direct real estate might be very happy with a 12%-13% return. Of course then we're going to get into huge debates about risk and reward and the use of gearing. Institutions generally don't gear their portfolios although that's another reason they like limited partnerships. Opportunistic financial investors like ourselves try and use gearing as aggressively but in as controlled a fashion as we can.

TWST: The institutional investors that are prohibited from using gearing - perhaps their pension fund mandate doesn't allow it - can they still use these limited partnerships?

Mr. Marcus: Yes, a number of them can. The interesting issue for them is that as soon as something becomes unquoted it tends to sit under the direct property mandate, so even though it's technically an unquoted equity, the direct property man will manage their exposure. If you look at somebody like Legal & General, one of the UK's general insurers, they own one-third of Arlington Securities, probably the best regarded business park developer in the UK. It's unquoted; it's really a land bank, and a retained property investment portfolio that it has developed. This investment is managed by the direct property side. Arlington is geared, and you'll find that a lot of these limited partnership funds are also geared. So there doesn't seem to be a problem with an insurance company or a pension fund participating in a limited partnership and then the limited partnership itself having gearing. It's not really different from them investing in a listed company which normally has gearing attached to it.

TWST: Are there any other issues you'd like to highlight in the interview?

Mr. Marcus: I think the old adage of location, location, location for property is certainly true. But I would say it's also a matter of timing, because we know that this is a cyclical industry, we're just not quite sure of the length and depth of the cycles, although they seem to be getting shorter. And above all, if you back the right people you normally won't go wrong.