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Four analysts and top management from twelve sector firms examine the real estate investment trusts sector in this special 63-page Real Estate Investment Trusts issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info471.htm.

TWST: Stuart, is the real estate industry better positioned today to withstand the challenges of a weak economy than it was at the time of the last recession?

Mr. Seeley: Our sense, and I’ll echo a theme that Sam also mentioned, is that this downturn is very different from what we saw the last time around. The good news is that we generally do not have the massive overbuilding that we had in the late 1980s and early 1990s across almost all property types. The bad news is that we have never seen a pullback in demand, a virtual falloff, like this. And if you look through the data — whether it’s Torto Wheaton or REIS — we have never seen this rapid a spike in vacancy rates. So on the one hand, we do think that we are better positioned to work through the current disequilibrium in the property markets once the economy starts to recover. But on the other hand, we are really in uncharted territory in terms of the fundamentals of the business and the drivers of demand. We are still paying heavily for the borrowed absorption we had in 2000 against hoped for future absorption, which just never took place.

TWST: Stuart, how do you view the comparison between the CBDs and the suburbs?

Mr. Seeley: We agree with Steve. If you look at what has happened so far this year, right now CBD vacancy stands at about 10%. Having said that, it has changed rather radically from the end of last year, which was close to 7%, or up 300 basis points or so in the CBD. The suburban assets have fared even worse, with the vacancy rate increasing from about 9% last December to about 14%. We believe going forward that CBD markets will continue to outperform the suburban markets, although certain cities that had the most dramatic excess absorption during 2000 will be challenged, such as Seattle and Boston and in Northern California.

TWST: Stuart, will downtown business centers continue to be choice locations going forward?

Mr. Seeley: Long term, we strongly believe in the viability of central business districts. We do think that there are going to be centers of finance, commerce and so forth. However, we think downtown New York has been changed permanently, and we would not expect to see the same level of robust office activity in lower Manhattan that we saw prior to September 11.

TWST: Stuart?

Mr. Seeley: The only other name I’d throw into the hopper would be Alexandria (NYSE:ARE). It’s a neat company that has a great niche in the life sciences sector, which has largely been unaffected by the general downturn. The company has consistently added value and earnings through their internally sourced redevelopment program. This is a very interesting company, but it trades at a heck of a premium both on a multiple basis and on a NAV basis. It’s thinly traded and it’s hard to get a sizable position in the stock. However, we think it’s worth it and people should keep an eye on it.

1) Real Estate Investment Trusts - In an in-depth (11,500 words) Analyst Roundtable, Samuel A. Lieber, CEO/Portfolio Manager at Alpine Asset Management, Steve Sakwa, Senior Analyst at Merrill Lynch Global Securities, Stuart Seeley, Director at UBS Warburg and Greg Whyte, Head of Real Estate and REIT research team at Morgan Stanley, examine the outlook for the sector including overbuilding of offices markets, excess supply and share specific stock recommendations.

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

3) CEO interviews (average 2,500 words). Top management of twelve sector firms examine the outlook for their firm and the sector.