Beginning with the outlook for REITs this year, NAREIT president and CEO Steven A. Wechsler described the big picture, saying, "the REIT and publicly traded REIT industry is bigger than you think." He went on to say that REITs surpass even the airline and aerospace industries in size. "This is not your father's REIT industry," he quipped.

Weschsler then turned to senior vice presidents Michael R. Grupe and Tony M. Edwards to elaborate on the future of REITs and the terrorism insurance situation. Grupe's take on what may be can only be described as cautious optimism. "We face an economic environment of significant challenges, as well as a capital market that is still adjusting," he explained. "Most analysts--on Wall Street and in the academic community--have a high level of uncertainty as to how that's all going to play out." He also noted that Federal Reserve Chairman Alan Greenspan recently commented that there is no clear data that the economy is on the verge of emerging form the current slump.

Given the climate, however, Grupe went on to say that most analysts expect real estate stocks to generate returns ranging from 7% to 10% in 2002. Indeed, Merrill Lynch predicts 7% to 10%, Morgan Stanley predicts 7%, and Salomon Smith Barney predicts 8% to 10%. "The most promising outlook would be for a broad-based, moderate economic recovery," he said. Such a climate would firm up and stabilize demand for space, and would not place too much pressure on interest rates. "That would be the best possible environment for the real estate industry." Offering a few more specifics, he added that there would likely be more activity in retail REITs than in office REITs when things do start to look up. "When the economy does begin to emerge," he said, "the retail side, representing consumers [tends to] rebound more quickly than the business side.