1. Globalization of the securitized real estate industry is such a hot topic. What has ­fueled international expansion? What are a few of the significant milestones in the global expansion of the REIT model?

The single biggest driver of the international globalization of real estate has been the proliferation of REIT markets globally. You’ve had REITs in the United States, Belgium and Australia for decades, but the biggest milestone was the introduction of REITs in Japan in 2001, and also the introduction of REITs in Singapore in 2002.

This year, Hong Kong successfully introduced its first REIT IPO with Champion REIT. In 2006, several international REIT markets have emerged, such as Korea, Taiwan, Malaysia, Turkey and Thailand.

In Europe, REITs were introduced in France in 2003. That started a chain reaction, and there are many milestones to go. There will be the introduction of REITs in the U.K. with an agreed deadline of January 2007, and we expect the introduction of German REITs in 2007 as well. Germany is now only about 2 percent of the global listed real estate market and is likely to become a $100 billion market by the end of this decade. The U.K. will be closer to $50 billion.

2. What things should U.S. investors know before investing in international real estate securities? What are some obstacles to be mindful of with overseas investment?

To market a foreign IPO in the U.S. is tough, given the extra level of compliance, and sometimes companies don’t do it. Unless our clients have an international branch, they are unable to participate in capital market activities abroad. That’s particularly important for global real estate, because the market capitalization is likely to increase from about $700 billion to over $1 trillion by the end of the decade, and most of that growth is going to happen outside the U.S. To make sure U.S. companies get exposure to foreign opportunities and markets, they need to be mindful of this.

Although REITs have one common aim, to allow direct real estate returns in a securitized form, there are differences to be aware of and different structures around the globe. For example, Asian REITs are more passive and externally managed. Europe features a mixture of both internally and externally managed vehicles, while the U.S. and Australian models are more like operating companies.

Also, you can’t take a black box to the U.S. evaluation approach and apply it around the world. A lot of other countries possess more of a NAV focus, and Singapore and Japan are more yield focused relative to the United States. Foreign markets will look at different metrics and there is no one common denominator. To invest abroad, we have to adopt the thinking of the overseas buyer.

3. More real estate companies are starting to operate a global platform. What will be the characteristics of the companies that successfully accomplish this strategy? Should investors target those companies?

I think whenever anyone goes global, it’s a good idea to have a local partner, or at least have persons from the area as a significant part of your team. Companies that have proved successful using that approach are ProLogis (NYSE: PLD), Simon Property Group (NYSE: SPG) and The Westfield Group (ASX: WDC). These companies are dominant, successful players in terms of taking a global approach, and they have very good businesses. Simon is driven by the limited domestic opportunities, and for ProLogis, the opportunity has been to provide a global distribution space for their tenant base. Westfield has arguably been the most global group in terms of its spread of world investment, and has been doing it longer than any REIT that exists today.

It’s no good to go global just for global’s sake. There has to be some kind of incremental investment opportunity, and normally that would involve some higher level of return with taking a global approach.

4. With the introduction of REITs in the U.K. and Germany on deck, what other future development will have an impact on the global real estate investment landscape?

I think the introduction of REITs in Germany has the potential itself to make a big impact. Looking past the introduction of REITs elsewhere, we have the capacity for equity issuance. It could soak up capital and perhaps cause an erosion of pricing, particularly in the U.S., which is something we should be aware of, and it does temper the enthusiasm a little bit. However, the demand for real estate is more than sufficient to compensate for that new equity.

I think some of the development will be the evolution of the REITs in Asia into a more sophisticated investment vehicle, adding high levels of development and looking to add external management. We’ll see more cross border investment, and lastly we’ll see the REITs of the western market invest in Central and Eastern Europe. Already, companies like Simon and ProLogis are interested in the Russian market. More existing REITs will take on foreign investment opportunities.