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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: Sam, what do you like in the retail sector?

Mr. Lieber: I tend to agree with much of what’s been said. One point, as a follow-up to what Greg mentioned, concerns relative multiples. The relative multiples of strip center stocks are at record levels. I think the growth prospects are modest for these traditional grocery-anchored strip centers, but the downside is not significant so the market is buying yield and stability. In a protracted recession, even the large discounters Kmart, Target, Home Depot and Costco could see some softness. Only then would it be more of an issue for some of the power-center REITs. While the impact of soft retailing over one year is not going to be too significant, I should point out that 2001 saw more leases returned to mall landlords via bankruptcy than we’ve seen since 1995. Right now it doesn’t look as if we will have such severe problems next year, but if the downturn does continue, toward the end of next year, we might see more retailers filing for bankruptcy, and hence, more space coming back to the mall operators. So, with that caveat in mind, we think retail REITs are a pretty decent place to hide out right now, and if we do get a recovery, there will be some upside. Mr. Lieber: I have one last point regarding retail stocks. No one touched on an outlet center, maybe because there’s really only one major outlet center company. Chelsea Property Group (NYSE:CPG) has also generated higher growth rates than any other retail REIT. Chelsea has consistently delivered double-digit growth rates, and even though they’ve become involved in the Internet and their own version of e-retailing, it hasn’t hurt their operations in any way, and in fact, it may very well be a contributor down the line. Chelsea’s outlet centers seem to offer, in shopper’s minds, value for value products. This year might actually be a very good year for this because many department stores, after September 11, turned to their suppliers of the big brands and told them, “Look, we’re not going to take our usual allocation this year. You keep it.” So what’s happened is that those major brands (Polo, Tommy and so on), put more back into, let’s say, T.J. Maxx. They’ve also turned to their own outlet chains, so you’re getting fresher merchandise — not a season late but a relatively current product now coming through a number of the outlet stores this season. That may turn out to be quite positive for sales in the outlet malls. Finally, their developments in Japan have worked out phenomenally well. So there are other avenues in different countries abroad that may be viewed as contributors for their longer-term ability to maintain double-digit growth rates.

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.