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Seven analysts and top management from twenty-seven sector firms examine the REITs sector in this special 141-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info380.htm

TWST: Sam, are you more optimistic for the near term?

Mr. Lieber: This is an interesting time because we’re ostensibly at the end of an economic cycle, yet it doesn’t really feel like it with 4.5% unemployment and low interest rates. Consumer confidence is down considerably from where we were a year ago, so there is still uncertainty in investor psychology, which is good for this group. I think we have to look at REITs from two different sides. One is the fundamentals as they pertain to real estate supply and demand today and then with regard to the overall outlook or prospects for the next 18 months. The other side is the equity component for these stocks, and we have all touched on various aspects already. However, it is important to emphasize that during periods of uncertainty, with the probability of further downgraded earnings expectations for the S&P 500, the stability of commercial real estate, due to the long-term lease structure, is going to be very positive, and in fact has been a major factor over the last year. Another aspect of real estate is the high-income component of its total return. That has been seized upon by investors this year, as the high yielding stocks have been superior performers. As Larry suggested, these REITs are not regarded as the stellar companies in the sector due to either issues at the property level, the management level, or with the balance sheet. This is in a complete contrast with the companies that performed very well last year, the large, quality defensive stocks. Now that income stories have done better, I think that we are in the beginning of a sentiment shift, although for the last two weeks, health care and small cap REITs have still outperformed the other sectors. That may be due in part to the Russell 2000 inclusion of many small REITS in place of many high-tech companies that are now trading for under $2 a share. Thus, REITS are benefiting from a mix of technical market factors, investor psychology, real estate fundamentals and some of the equity attributes of REITs. This adds up to near-term outperformance.

TWST: Sam, what are the stocks you’d like to highlight in the retail sector?

Mr. Lieber: Well, as Dan suggested, there have been issues with retail in the past, particularly malls. Several years ago everyone was worried about big box “power centers” taking away business from department stores. Department stores have refashioned themselves somewhat and improved performance. The other issues, of course, were the Internet in 1999 and last year there were concerns about recession. The retail REIT stocks have bounced back nicely, as have those of retailers. These REITs do have a lot of positive attributes, which I think Lou mentioned. Some of the retail REITs were pretty cheap and have had a nice big bounce, so we’ve lightened up on a couple of names such as Crown American (NYSE:CWN), Kramont and Entertainment Properties (NYSE:EPR). Our focus now is more on some of the perceived higher quality companies. We like CBL (NYSE:CBL), which we think is a cheap, quality company, albeit its Southeast exposure is perhaps going to be a little slower economically. The manufacturing cutbacks have been a factor in the Southeast, so we’re a little more cautious there, but on a relative basis, it’s certainly one of the more attractive quality plays, with a seasoned management team.

This special issue includes:

1) REITs - In an in-depth (15,800 words) Analyst Roundtable, Samuel Lieber, CEO/Portfolio Manager at Alpine Management & Research LLC, Daniel Pine, Senior Vice President at Alliance Capital Management, Lawrence Raiman, Managing Director at Credit Suisse First Boston, David Shulman, Managing Director at Lehman Brothers, Ross Smotrich, Managing Director at Bear, Stearns & Co. and Louis Taylor, Managing Director at Deutsche Banc Alex. Brown, examine the outlook for the sector including, recent stock performance, prospects for upside growth and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at twenty-six sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Outlook for REITs - In an in-depth (5,500 words) Analyst Interview, Christopher Haley, Director of Real Estate Securities Group at First Union Securities Equity Research, examines the outlook for the sector and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of twenty-seven sector firms examine the outlook for their firm and the sector.