Bonnie Gottlieb. NAREIT and former CREW DC President

Panelists:

George F. (Skip) McKenzie

President & CEO, Washington Real Estate Investment Trust and Member, NAREIT Board of Governors

Roger Waesche, Jr.

President & CEO, Corporate Office Properties Trust

W. Edward Walter

President & CEO, Host Hotels and Resorts, Inc. and NAREIT’s First Vice Chair

The moderator, Bonnie Gottlieb, began the presentation by introducing the three panelists and having them describe each of their REITs. She then went into a brief description of what REITs are and the rules and regulations that govern what is and is not a REIT. She then brought the group into discussion regarding raising capital before and after the recession. Skip said it is easier for REITs to finance because they can issue stocks and debt. He then said in September 2008, the debt markets shut down and REITs stopped buying properties so no one was looking to invest but they still needed to capital to delever their properties. They were able to find equity to do so through the “At the Market” program. He said the problem today is not so much finding capital but finding attractive investments. Roger agreed that it is challenging to find good assets these days.

Bonnie went on to ask what lessons they learned from the recession and Roger commented that they all know it’s a cyclical business but when things are good, it’s hard not to get caught up in that. Skip said they focus on their ladder of debt maturities and make sure everything is planned and laid out correctly so they do not have a large amount of maturities all at once.

The next question was regarding investment objectives—value, liquidity, etc. Skip said that they look at the cost of capital and what their returns will be over a 10 year period. Ed said that the cost of capital is a little more for them so they focus on a balanced distribution across the world. They have to map out where they want their assets. Roger said their basis is forever so they first look at if the investment is good for the company and good for the stock price. Then they look at what the asset will do over time to see if it will remain a good investment.

The panel closed on a discussion of operating outlook. Ed said that lodging is not doing well in the DC region due to fewer conventions and legislative activity. They are seeing room revenues up 6% across the country but down 30% in the DC area. Roger says they are seeing a lot of caution in the defense business because they are waiting to see what happens with government spending. Skips said they are currently in four sectors- multifamily, retail, medical office buildings, and office. They are seeing multifamily doing great; retail is recovering nicely; medical office buildings have slowed in expansion due to the specter of healthcare reform; office is in a holding pattern until we know what is going to happen with government spending and budgets.