He adds that the firm is also looking into new avenues ofbusiness, including more consulting, advisory and third partymanagement work. "We're also seeing a lot of the fruits of ourlabor over the past two or three years finally come to fruition,"Klein tells GlobeSt.com. "Deals that were stalled for court reasonsor permitting situations have now started to turn lose, and thoseprojects are going to accelerate."

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Part of Klein's success can be attributed to his optimism. "Ifwe all got up in the morning and looked at the clouds in the sky,we probably wouldn't get out of bed," he relates. "I'm a subscriberto the idea that we are going forward, not backwards."

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As far as where the world is going, "there is a lot to bedetermined over the next few months," Klein says. "But we arestarting to see opportunities crop up because people are morepositive." Though he admits that we are likely to face more stressahead, "most of the banks and insurance companies are trying theirbest to work out deals. If everybody agreed to stand still at thispoint in time, we'd come out of this downturn much faster."

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As regions go, New Jersey has some major strengths, such as acapable port with solid infrastructure, a vast road network, amajor airport and a well-educated population. "New Jersey is avital distribution and warehousing hub, and it can still be a greatmanufacturing region, particularly if you look at the southern partof the state, which is relatively untouched and houses good laborand roads as well as access to Philadelphia's airport and port andCamden's port," Klein tells GlobeSt.com. "From the standpoint ofheavy manufacturing or heavy distribution, the state still has thataccessibility."

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Unfortunately, the state also boasts some of the highestproperty taxes and a lengthy permit approval process. "We've gottenthe reputation of being very unfriendly to new business," saysKlein. "Industrial developers can go to Indianapolis and get a onemillion-square-foot building constructed in eight or nine months,while that same building in New Jersey might take three years.That's a big problem."

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However, Klein notes that those involved in Gov. ChrisChristie's new administration are well versed in the problemsfacing the state. "They should be able to lead us in the rightdirection."

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In order to get deals done in today's environment, Klein says ittakes a good deal of creativity. "Transaction volume is down around80% to 90%, and the only deals that are getting done are the reallygood ones; meaning, for 25 cents on the dollar, the return is northof 24% or 25% on an internal rate of return," he remarks. Thatbeing said, "you really need to think outside the box to createthose deals."

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To that end, Kay recently created a supermarket in a shoppingcenter where one was lacking; the second time the company hasdeveloped a grocery store specifically for a center. "It takes alot of money, the right people and the right place, but it's a goodexample of the deals we've had to do to separate ourselves from thecompetition," Klein says.

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Aside from additional out of the box thinking, Klein predicts wewill see a lot of distressed land sales. "The opportunities areendless, with banks holding 50% loans on land that may or may notbe approved," he says.

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In fact, Kay Realty is currently shopping around for its owninvestment opportunities. "There are a number of note sales, butit's difficult to find ones that are of interest to us," Kleinrelates. "Most of the sales that are listed on the Internet are forbelow grade assets, such as a five-unit apartment in the LowerBronx or a 10-unit building in Newark. Needless to say, they arenot the greatest."

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But many broker-suggested sales have also proven disappointing."Many brokers have brought me large deals, but oftentimes I willfind out that I'm not dealing with the bank, but rather with theowner who wants to take my bid to the bank and show them how low itis."

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As a result, the bulk of investments Klein is exploring arethose that are below the radar screen. "We use our networks in thestate to find the best deals that the big brokerage houses have notyet listed," he tells GlobeSt.com.

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Always the optimist, Klein says the firm will focus much of its2010 effort on opportunities for its advisory services division."We have found that many smaller supermarket companies in the stateare spending a lot of money of their back office operations, so wedeveloped a specialized group of supermarket gurus who can act asan advisor to these supermarkets. "It would free them up and helpthem to develop new markets," Klein notes. "Obviously, we can alsodevelop new markets for ourselves and for our Kay-ownedsupermarkets." He adds that the firm is also focusing its attentionon rolling out some small, old-fashioned grocery store concepts incertain shore towns.

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