| Are you investing in CMBS at allthese days?


Moran: We have had a historically high allocationto CMBS and we are still active today.

| Are you finding bargains in themarket now?


Moran: Oh yes. There are a lot of opportunities tofind value. The CMBS market remains liquid, so tradingopportunities vary based on market conditions.

| Can you give me an example of recenttrades you have executed?


Moran: We want to get out of credit bonds that areperceived as being weak vintages and go into high-quality,vintage-2008 bonds on a net neutral basis.

| There have been some CMBS dealscoming to market lately. Are you interested in these at all?


Moran: No, we are fully allocated to CMBS now --we are not looking to add to the portfolio.

| In what areas are you increasingexposure?


Moran: We have a growing appetite for real estateequity opportunity funds – specifically opportunistic andvalue-add, with an emphasis on international exposure.

| How much of an increase are yougiving this category?


Moran: Equity funds are a small percentage of whatwe do at Allstate. Still, though, I would say from that base wewill substantially grow our allocation in the medium term.

| What about distressed debt? Will yoube increasing your allocation to that asset class?


Moran: That is not a particular focus of oursright now. There is way too much money raised for distressed debtcompared to the quality of opportunities is that space. Our focusis more on diversification in support of a broad asset allocationstrategy, rather than a tactical, opportunistic strategy.

| You say you will be stepping up yourinvestment pace but it won't match the level of the last few years.Any final thoughts on the current state of the real estate capitalmarkets?


Moran: The debt markets remain challenged but areopen at more rational leverage levels. The exuberance, of course,is long over but now it seems as though the death spiral is over aswell. Ever since the Federal Reserve Bank's bailout of Bear Stearns, thetail has been cut off. Leverage levels and risk appetite will notreturn to where it was at the peak of market for some time – ifever – but I think there will be good opportunities to be involvedin the markets over the next six months.

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