Why did you decide to start expandinginto other states now?


Mossman: It's been part of our strategic plan tobe Denver and West for some time now. Really, it's opportunityspecific. That is the reason for why it happened now. We looked atseveral things up in the Pacific Northwest, and when you're goingto make a move into a new area, you either have to do it either asa portfolio or by size, just to make it efficient. One couldn't runone small center in Oregon or Washington out of our currentoffices. This opportunity presented itself, and we were able tocheck the box on the size.

| What is attractive about the PacificNorthwest?


Mossman: Barrier to entry is probably number one.And the relative stability to housing compared to some of the othergrowth markets we're in. It also provides diversity for our overallcompany, and we like the market's long term.

| What are the differences between amarket like that and Southern California?


Mossman: A lot of it is predicated on housing.You're going to have a lot of new retail popping up in SouthernCalifornia in a normal market just from a factor of new homes. Asyou have new homes, it creates an opportunity for new retail. Inthe Pacific Northwest, obviously, the housing growth isn't thesame, so the velocity of new retail isn't the same. In Oregon,you're dealing with a state that doesn't have sales tax. You gofrom California where most jurisdictions like seeing you comebecause you're generating sales tax, to an area that could careless. That's another difference that you've got to be aware of.

| Are you buying any different types ofdifferent centers as a result of this expansion than you werebefore?


Mossman: It's the same mantra. We areneighborhood, grocery, drug-anchored based. That's the sweet spotof what we do. We like that daily needs trip, and we believe thathaving that as the focus of our portfolio is what we like to callrecession resilient. We then, under the guise of diversification,have developed and purchased community and big-box centers. That'sthe case in Kaiser, OR. You have a Target and a Lowe's.

| Has the current economic climategiven you pause when planning developments or acquisitions?


Mossman: The market has clearly changed. Withevery decision, you're taking a fresher, harder look at given theclimate we're in today. By no means does it mean we're closed forbusiness, though. We have a strong capital structure, and inDecember, we had a record closing in one month. But we're beingsmart about it. In the deals we bought, we feel like we got goodprices now and in the future.

| Grocers seemed to have fared well inthis environment. What would you attribute to that?


Mossman: They were smart. They were smart severalyears ago to focus on their own shop and figure out what's going todraw and keep the customer, rather than just throwing out a genericfootprint and believe the customer was going to continue to come.Over the last several years they have been doing very few new dealsand spending the majority of their time on remodels. They have seena good return from that investment. In addition, they havepositioned themselves well. Now, when you have a tougher economy,fewer and fewer people are going out to eat. They're utilizing thegrocery store more. Most of these stores, as part of theirremodels, have a lot of products that are already cooked. That'smore affordable than going and sitting down somewhere. The timingof looking inside at how they were doing business probably came ata pretty good time.

| Do you think the store closings wehave heard about so far this year will continue?


Mossman: We predicted that we would have falloutright after the holidays. We've had some fallout. It's notcatastrophic. I wish I had a crystal ball, but I wouldn't expectthe climate to improve any time soon. When it's going to turn, Iwish I knew. We all wish we knew.

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