"2008 will continue to be an interesting year as capital marketscontinue to clamp down," H. Kerr Taylor, AmREIT's chairman, CEO andpresident, told shareholders and analysts during yesterday'searnings call. He added "this year will be a launching pad for us"although many competitors are boxed in with current capital marketconditions.

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Taylor says one reason for the optimism is sellers are startingto loosen up on putting their assets on the market. "At this timelast year, we couldn't see much quality. People were selling B andC projects, but not letting go of A," Taylor said. "They'restarting to let go."

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The company's team is in negotiation for several class Aprojects, Taylor continued, adding AmREIT is seeing littlecompetition in the field. "There is not a robust pipeline," heacknowledged. "But I think we'll be successful with at least one ortwo of the transactions. As we continue, we'll see more and morecoming into the pipeline."

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What is likely to continue slowing up, however, is ground-updevelopment. Not much, if any, spec product will come on lineeither. "I think it's healthy," Taylor commented. "I'd said lastyear we were in the red zone and we'd need to see a pull backsomehow."

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AmREIT executives also were confident about their leasingactivities. Total lease expirations for 2008 represent 1.88% of theportfolio. "It gets a little stronger in 2009 at a 7.5% roll, butwe're also taking some proactive steps to get those renewals doneearly," said Chad C. Braun, vice president and CFO of AmREIT.

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One thing saving AmREIT on the leasing side is the weightedlocal and regional tenant mix. Braun said AmREIT's assets havelimited exposure in the retail areas that are being hiteconomically, which include popularly priced apparel, homeimprovement and full-service casual dining.

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There are a couple of properties in which AmREIT is losingtenants mid-term. "But in both cases, we have better replacementsfor those tenants stepping in immediately," Braun said. Althoughspecifics could not be mentioned because deals are still undernegotiation, one tenant, a national Italian restaurant chain, isclosing its doors, but will be replaced by a national steakhouse.In another situation, a local restaurant that is going out ofbusiness will be replaced buy a successful regional Frenchrestaurant concept.

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"I hate to lose a tenant," Braun commented. "But if I'm going tolose one, that's the best way to go."

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