As an avid runner, I find many invigorating aspects to the sport, such as the thrill of racing to the finish line, the sense of achievement after climbing a steep hill and, I'll admit, the fun of showing off when speeding past tourists on the streets of Washington, D.C. With these "runner's high" moments also come many pitfalls, like struggling to finish the last mile or falling from unsure footing.

The investor marketplace parallels the ups and downs of running, and this was especially true for REITs and listed real estate in the final weeks of 2006. It seemed that the entire industry was in a race to buy or sell. With 37 mergers and acquisitions, totaling approximately $120 billion, the REIT race this past year highlighted strong performance mixed with consolidation and privatization.

Shortly after the proposed $36 billion acquisition of Equity Office Properties Trust by The Blackstone Group, Christopher Haley, managing director of Wachovia Securities, remarked, "The recycling of capital from this privatization will keep the real estate sector up." Others have also agreed that this development will be good for public markets.

So, as we line up at the starting line of 2007, what will the industry encounter in the year to come? Will M&A activity continue? Will there be more REIT IPOs? How will certain sectors be affected? Portfolio saw this as an opportune time to sit down with five industry professionals to discuss the possible developments and trends 2007 could bring. Turn to "The 2007 Landscape" to read their predictions and opinions.

Also in this Issue

The 2006 NAREIT Annual Convention brought approximately 1,200 industry professionals into San Francisco in November. The conference focused on the current state of the REIT industry in terms of globalization, consolidation and leadership. For photos, recaps and a review of what was said at the conference, turn to "A Meeting of the Minds."

The conference held many panels, one in particular that discussed the current state of REITs and publicly traded real estate companies around the world. Many REIT executives, from the U.S. and abroad, discussed investment opportunities in terms of building portfolios by developing and acquiring international properties. Read about what they think will affect the international REIT industry in "Global Summit."

Let the 2007 race begin. See you at the finish line.

Erin Corcoran
Managing Editor