GlobeSt.com: What is the general direction of the capital markets as we head into 2005?

Miller: The simple answer is that the capital markets seem to be moving sideways. In 2003, we saw several bumps in pricing, particularly one toward the end of the year and rolling into January. We found ourselves bidding on properties that were getting away from us. So we responded and became more competitive.

GlobeSt.com: You mean you started to bid up.

Miller: We started to match market pricing, if you will. We've noticed in 2004 that there hasn't been another major step-up, but in places like New York City; Washington, DC; and Boston there is a creeping increase. There is plenty of capital and product, but pricing is relatively flat.

GlobeSt.com: But those flat prices are also inflated.

Miller: Relative to '03, I would agree.

GlobeSt.com: What if cap rates don't keep up with interest rates? Are we headed for a fall?

Miller: That would probably be determined product type by product type, but unless we see a material change in interest rates, I don't see a dramatic change in pricing.

GlobeSt.com: Fair enough, but have you seen a lot of deals that make you scratch your head in wonder?

Miller: There have been a lot more this year. There are people paying huge prices per square foot but without enough term on the lease to amortize their basis, and they're not getting that great a leverage yield to begin with to figure out how to justify the previous risks. So, yes, there are deals that I shake my head at.

GlobeSt.com: At the same time, Wells has been cited as overly aggressive. How do you respond?

Miller: I respond on the basis of track record. People have shaken their heads at what we've been doing for a number of years now, but the Wells REIT by any measure is an incredible success. Most of the property in that portfolio is worth vastly more than what we paid for it. We have long-term credibility to hang our hat on, but I would rather point you to the fact that we share people's concern over pricing and as a result, our volume will be cut in half or less from 2003. In '02/'03, we were the number-one purchaser of class A office and industrial property according to Real Capital Analytics. We might be eighth or ninth this year.

GlobeSt.com: So what are the numbers for '04 compared to '03?

Miller: We did $2.6 billion in 2003, a lot of that in the second half. In 2004 we think we'll do about a billion two.

GlobeSt.com: Your public perception took a major hit a while back. The NASD sanction, the Forbes article, both set against the backdrop of Leo's professed commitment to a Christian environment. What say you?

Miller: Our reputation and integrity are at an all-time high. We don't get questioned typically because much of that took place in the popular press. So from a real estate standpoint there hasn't been great impact. We just signed a long term relationship with Jones Lang LaSalle, one of the finest organizations in terms of integrity and very focused on doing business with people who would enhance their reputation. My value system and faith are not dissimilar to Leo's. That creates a higher standard for us and we try to live up to that every day. We all make mistakes, but those things happened many moons ago. We anticipate that you won't see anything like that again.

GlobeSt.com: Update us on the funds.

Miller: REIT 1 is closed with about a $4.5-billion portfolio. It's baking in the oven as we do our work to create value there. REIT II is approaching its first anniversary of being open and available. We've raised in the $600-million-to-$700-million range and bought or have properties under contract in total of up to $1 billion using our line of credit to take down properties in advance of the fund raising.

GlobeSt.com: What about a Wells III?

Miller: We're batting around those ideas all the time. In a year we would hope to report that we are in the $2-billion range in REIT II and duplicating the success of REIT I. We also hope to be able to talk about a product that extends off of our core competencies and gives our clients the opportunity to choose within the risk spectrum of other products--through us as a sponsor.