By Matthew Bechard

There has been a lot of talk in this issue about how real estate stocks will perform in 2003. Will it be another strong year for the industry? Or, will we step back? Which sectors and companies might do better than others? We posed some of these questions to leading sell-side analysts as part of the first Real Estate Portfolio Stock Challenge.

Participating investment firms include Banc of America Securities, Credit Suisse First Boston, Legg Mason Wood Walker, McDonald Investments, RBC Capital Management and Wachovia Securities. In addition, we asked one of the industry’s leading journalists, Barry Vinocur of Rainmaker Media Group, to also provide his selections.

The participants will test their wits against one another in an attempt to predict the 2003 year-end value of the NAREIT Equity REIT Index and the Morgan Stanley REIT Index. In addition, each participant will select a portfolio containing the five individual real estate stocks anticipated to be top performers—the portfolios can be altered on an as-needed basis throughout the year.

Participants may select from the constituent lists of the NAREIT Equity REIT Index and the NAREIT Real Estate 50 Index. If one analyst is bullish on lodging companies, then that will be reflected in his selections. If another analyst anticipates a strong rebound in the office sector, than that will be seen in his selections.

The participant who comes closest on a percentage basis to predicting the year-end value of the NAREIT Equity Index will be the winner of that portion of the challenge (prediction can be higher or lower than the final index value). The same holds true for predicting the year-end value of the Morgan Stanley REIT Index. The portfolio portion will be judged based on total return at the end of the year.

To see a complete list of participants and their selections, log on to www.nareit.com. Each month, we will update the rankings online, as well as provide a leaderboard in this magazine.

The Stock Challenge is for entertainment purposes only and readers should keep in mind that the selections made are not recommendations to purchase any specific stock. In early 2004, we will highlight the winners and see how close the leading analysts came in predicting where the industry would wind up at the end of 2003.