A five-point liquidity plan formally launched by the Roundtable in October has already made its way into legislative action (See sidebar below), in the form of the Fed's creation of the TALF loan facility and acceptance of newly issued and legacy CMBS as collateral. RER also had a major hand in shaping the PPIP program.

But DeBoer doesn't spend too much staring at the score: "There have been, in a relatively short time, a series of positive policy initiatives in which we have had a leading role. But so much more needs to be done from both an industry and policy perspective. The race is not over by any stretch of the imagination."

He sees the need ahead as two-fold. "We need policies that will encourage equity and we need to be protected from unnecessary tax increases that will further dampen real estate activity," he says.

For one, he notes, the Foreign Investment in Real Property Tax Act of 1980 "needs significant attention." In what DeBoer calls a new world of reduced value and lower leverage, lowering the barriers to foreign investment in US real estate will make this sector "more equal to investments in other types of industries."

The focus in coming months will also continue to be on tax increases, such as carried interest, which he points out could dampen activity in the sector.

"While there are some positive signs coming in some parts of the economy," he states, "in the real estate sector the real challenges lay ahead of us. That transition from the old world of relatively high leverage and relatively poor underwriting--in a period of strong economic growth--to much lower leverage, property values and macroeconomic earning power is going to be a challenge to the industry. How do we get from there to the new world with the least amount of pain and in the shortest amount of time?"

Despite the work ahead, DeBoer remains optimistic for the long-range future. "We don't know if the short term is 23, 24 or 36 months," he says. "But once we get to a place where there are more appropriate levels of leverage and more stable asset values built on true income, that will be very positive for the industry long term."

The Five-Point Plan

While formalized in Q4 of '08, much of the Real Estate Roundtable's five-point plan had already been in the works. The five points of the plan are:

•Reconnecting credit markets and restoring credit capacity;

•Encouraging lenders and mortgage servicers to provide more flexibility to restructure and modify loans when a positive outcome can be generated;

•Stabilizing property markets;

•Protecting property values; and

•Restoring investor confidence.

Instant Insights /

More Equity, Eased Tax Burden Are Twin Challenges

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