Columbia, MD-based Corporate Office Properties Trust [COPT], inits earnings call last week, reported a 17.3% increase in dilutedFFO to $2.24 for the year. But in the words of president and CEORandall M. Griffin, the REIT has "conservatively planned for arecession" this year despite feeling that it is "well positionedfor strong growth in 2008." The company's tenants are heavilyconcentrated in the US government and defense informationtechnology sectors, known for stability in good times and bad.

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On the opposite coast from COPT, president and CEO Jordan L.Kaplan of Douglas Emmett Inc., commenting in that company'searnings conference call, acknowledged 2007 as "an extremelyvolatile year for the real estate industry," but noted that theREIT's portfolio, which includes Sherman Oaks Galleria in the SanFernando Valley, reached a record level of nearly 96% leased in theyear. The Santa Monica, CA-based Emmett is one of the newest publicREITs, just finishing its first year as a publicly held company,having gone to the public markets at a time when other REITs weregoing in the opposite direction--being taken private.

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One reason it was able to raise the funds in public markets whenit did, according to analysts, is that Emmett's portfolio includesa high concentration of top-tier properties on the Westside of LosAngeles. The company also owns property in some of the bestsuburban Los Angeles office markets, including its Sherman OaksGalleria project in the San Fernando Valley.

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Among the other REITs with substantial office holdings thatreported results last week was Edison, NJ-based Mack-Cali RealtyCorp., which posted higher FFO but lower net income for the fourthquarter and the year on revenues that edged up slightly. As theother chief executives did in their remarks during conferencecalls, Mack-Cali president and CEO Mitchell E. Hersh commented onthe economic slowdown. "While it is widely held that the nation'seconomy is slowing and the capital markets are constrained, weenter this period of uncertainty with an extremely well-leasedportfolio with high caliber tenants, minimal 2008 lease expirationsand a strong balance sheet," Hersh said. He said that the REIT'sapproach to 2008 will be "to operate efficiently as well as beopportunistic going forward."

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Emmett CEO Kaplan also sounded a note of optimism, saying thatafter a "very challenging acquisition climate" in 2007, the companyis "beginning to be increasingly optimistic" about the prospects ofacquiring new assets this year and sees "signs that sales activitywill accelerate during 2008." Nonetheless, Kaplan suggests thatEmmett might not see as many opportunities in its market as othercompanies find in theirs. "Unlike other markets, our markets do notcontain a significant number of buildings owned by overleveragedparties" that would be likely to sell in 2008, he explained.

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