GlobeSt.com: What is your clientele looking for in terms of real estate plays?

Kahn: I represent pension funds--large public and private funds with an investment horizon that's longer than a lot of the private-equity investors you'll meet. Given that longer view, they're more focused on stability, which means cash flow and income returns. In this market particularly, that emphasis has strengthened even though it's harder and pricier to obtain good core investments.

GlobeSt.com: So where does that focus drive you in terms of product and geography?

Kahn: It takes us in two directions. We've gone beyond classic core to enhanced-core and value-add. We also look at what was previously called alternative investments like self-storage; student and seniors housing; and even hotels, which are seeing a major renaissance. Those are asset sectors our pension fund investors haven't seen in a long time or, in some cases, ever. In terms of location, as I've seen the pricing rise, many of the secondary and tertiary markets have benefited enormously because investors are looking for something more affordable. So our focus more than ever is on locations where there's liquidity and where we believe in the long-term growth potential. We're looking for safe, prudent investments for our clients.

GlobeSt.com: Define enhanced-core for me.

Kahn: It's core A or B-plus product, well-leased in a good location, but it may need a little more leasing or very minor renovations.

GlobeSt.com: A handyman special?

Kahn: That might be the best description. It's certainly not a distressed asset by any stretch of the imagination.

GlobeSt.com: So many investors are scoping out alternative plays. Isn't the field getting very crowded?

Kahn: There's no question about it. There were much fewer institutional players 10 years ago than today. All of the sectors are different. Student housing, for instance, can't be studied the same way multifamily is studied. Look at the compelling demographics supporting this investment sector over the coming decade.

GlobeSt.com: There was some debate at the conference about the concept of absolute returns. Some favored it, some didn't. Do you deal in absolutes?

Kahn: We don't. Absolute returns are rarely a determining factor in whether you buy or not. Certainly there are desired yields we'd like to achieve, and many of our clients have investment hurdles they look for. If a deal comes in over the transom, and on our initial back-of-the-envelope look, it seems unlikely to make that hurdle we'll pass. We're benchmarked to NCREIF and we want to beat that benchmark.

GlobeSt.com: So what returns do they expect?

Kahn: Investors are all very savvy. I don't care if you're talking about a large institutional investor or the private investor who has $5 million to put into a deal. They define opportunistic across the board as more than 20% or better returns.

GlobeSt.com: So, what do they look for?

Kahn: In terms of an IRR, it would have to be a 7 and a half unleveraged. And that's achievable.

GlobeSt.com: You mentioned that they seek stability. What is your typical hold?

Kahn: On the core side it's usually a seven-to-10-year hold.

GlobeSt.com: How much do you expect your investment activity to grow as we swing into 2007?

Kahn: Last year our acquisition volume was very large. We placed more than $5 billion in equity. This year's volume should equal that. There is a cue of capital out there, and most funds have a waiting list of investors. If you're running a fund, you can't take the capital in unless you can place it or it's dilutive to your returns.

GlobeSt.com: And what might slow that activity? What concerns you, other than the obvious?

Kahn: The things that concern me are some of the creative financings that have been done. Something to watch is the CMBS market, and the first time you see repricing of debt tranches. That's something to be leery of. We discussed many concerns at the conference, but these were largely exogenous factors that we can't control. But the things we can't control don't worry me simply because I don't have any control over them. I don't see any sweeping change for '07. So we expect our investment activity is going to remain strong.