In the company's recent earnings call, president and CEO JimThomas outlined a scenario in which leasing remains strong andlong-term fundamentals look sound in markets like Los Angeles andAustin, but he reported that buying and selling buildings hasbecome problematic in the new capital markets landscape. "Thefundamentals of our business continue to be good," Thomas said inhis opening remarks. "Our occupancies and rental rates are strong,and while the economy may be slowing down, we are not yet feelingthe effect on our occupancy and rental rates." Thomas pointed outthat most of its leases are long-term so the amount of roll-over inthe next couple of years is minimal.

The major impact on the company's business from the creditmarkets turmoil has been in the acquisition segment of itsbusiness, according to Thomas. "We are feeling the credit crunch,"the Thomas Properties' chief said. "Our ability to execute ourstrategy of acquiring value-add core-plus assets has been seriouslyhampered by the unavailability of large financing."

Although a fair number of properties are on the market andavailable to buy, sellers have "little inclination to reduceprices," Thomas explained, particularly owners of class Abuildings. And on lower-quality assets, he said the differencebetween the bid and ask is substantial. "Given the state of thecredit markets, only low-leverage deals with good credit can getdone so we are focusing on lower-leverage deals and properties withassumable debt," Thomas said.