First, let's talk about the economy.I realize no one has a crystal ball, but what is your best bet on atimeframe for recovery?


Henry: Even if the proposed Federal plan goesthrough and is successful, this will not be a quick and painlessfix. My sense is that the economy will continue to be soft for thenext 12 months.

| But you feel secure with your currentinvestment plan?


Henry: We have always been selective about themarkets in which we invest and the assets. Our portfolio consistsof high-quality real estate and tenants with long-term leases thathave little roll-over. Two years ago, when the economy was strong,we were touting the incoming producing features of our portfolio.Now that the economy is in turmoil, we have a portfolio that hasbeen built to withstand an economic downturn. Another thing – theissue of the day is, of course, deleveraging – both in thefinancial system and at individual firms. But we are already there.Our leverage levels are approximately 20% to 30% LTV, which is verylow for our peer group. We do not have to re-engineer our portfolioright now in terms of tenants or leverage levels.

| What other investments do you thinkyou might make this year? Do you think you might invest globally asa lot of funds are doing now?


Henry: We have done $800 million thus far and wedo have the capacity to do more. But we are being very selective.For instance, while we are staying in the top 20 to 30 markets inthe US, we have made one small-sized investment in Moscow. This isa market we have studied very closely and a key member of our realestate team has close ties in the local construction anddevelopment industry. We have invested in a class A office thatwill be delivered toward the end of the year. Internationalinvesting is something we will continue to examine, but it will bea small part of our portfolio. We still see a lot of goodopportunities domestically.

| As you look for assets to buy, areyou finding that sellers are coming down off of their earlier priceexpectations?


Henry: The first part of this year was certainlypunctuated by a bid-ask spread and as a result relatively few dealsgot done. The summer was very quiet, but now that it is September,new offer memorandums are starting to come out. That is somethingwe will definitely be watching – whether sellers finally appreciatethat this is 2008 and not 2006.

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Erika Morphy

Erika Morphy has been writing about commercial real estate at for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.