In another example of the rapid globalization of the real estate industry, 2004 NAREIT Chair and AMB Property Corporation Chairman and Chief Executive Officer Hamid Moghadam, delivered the keynote address at the European Public Real Estate Association's annual convention in Berlin in September.

Speaking to an audience of leading real estate professionals and investors from across the globe, Moghadam said there are lessons from the evolution of REITs in the U.S. to share with countries considering the REIT structure.

"First,” he said, "both the industry and investors benefit when the structure is flexible enough to adapt to evolving business needs. Second, property companies will only convert to the REIT form if the structure makes it simple and appropriately tax-sensitive to property contributors; and third, clear alignment of interests between management and shareholders is essential to the success and growth of the industry.”

Moghadam's keynote presentation offered four main takeaways. First, he said of all the ways to invest in real estate, there is no structure that replicates the tax efficiency, liquidity and transparency of REITs. Second, Moghadam stressed to the audience that REITs have demonstrated outstanding market performance over time in good and bad real estate markets with dividend growth that has consistently outpaced inflation and competitive long-term returns. Third, he said the U.S. REIT structure has been dynamic, evolving in meaningful ways over the years to respond to market realities. Fourth, he stressed that the REIT structure will benefit from globalization as the insights and experiences of a broader range of market participants will result in an even more valuable structure than can be envisioned today.

In addition, Moghadam offered five predictions for the future of REITs in the face of increasing globalization.

"The first prediction is a very easy one–we will see globalization of the REIT model on a much larger scale going forward. The securitization of European property companies will occur at a rapid pace in the next decade. Private is good; public is better. I actually think public/private is best. The U.K. REIT proposal will go forward by 2006 and what is being called a Euro REIT will emerge as well.

"Second, I predict that the REIT structure will become the dominant form of commercial property ownership around the world. For example, the tax-transparent property investment structure will likely gain a firm foothold in Asia (even beyond Japan and Singapore) by the end of this decade. Listed property trusts in the world's largest continent could grow five-fold in the next decade, because an aging population needs low-risk investments to fund its pensions and retirement benefits. China, in particular, is a nation to watch closely as it has Asia's second- largest stock of investment-grade property after Japan. A C-REIT is all but inevitable.

"Third, REITs will grow to include an even larger component of private capital in their capital structure. While these arrangements introduce a level of complexity to the business, thoughtfully structured partnerships mitigate potential conflicts of interest and create advantages not available to the investor and the operator through other forms of collaboration."

"My fourth prediction is that there will be more harmonization and reciprocity between taxing regimes. NAREIT has already created what we call our Cross Border Initiative Task Force, whose sole purpose is the removal of barriers preventing REITs or REIT investors in one country from doing business or investing in another. The goal is to achieve comparable rules for property companies, be they German, Japanese or American.

"Fifth and finally, I predict greater uniformity and consistency in reporting standards around the world. This will make it even easier to compare and contrast performance across markets, which in turn will lead to a broader acceptance of the REIT vehicle.

"Realization of these predictions will require teamwork. Thanks to the good work of Nick van Ommen, Steve Wechsler, their staffs and members, the EPRA and NAREIT partnership will play an increasingly important role both in the adoption of tax-transparent property investment structures and implementation of common standards globally.”