Investors can expect to see the benefits of this shift intosupply constrained markets in next year's results, CEO Doug Crockertold analysts in this morning's third quarter conference call. Hesaid that the national apartment market, overall, continues to be"phenomenally strong".

Management says that they have been exiting markets likeArizona, Las Vegas and Colorado Springs where there are "lowbarriers to entry" and shifting capital to markets where new supplyis expected to be minimal. The trust reported that that it hasdisposed of $245 million worth of properties since the end of thethird quarter, while the trust has acquired properties worth $160million during the third quarter. Management said that 86% ofacquisitions have been in markets it deems supply-constrained,which include markets in the Northeast and selected Californiamarkets.

The trust has met its $600 million disposition goal for the yearalready, not including the $400 million or so the trust expects toreap from joint venture activity within the existing portfolio.Management said it is becoming increasingly difficult to executethe recycling strategy because CAP rates are not moving in tandemwith interest rates movements. Next years assumptions, managementsaid, include a negative 150 basis point arbitrage between buy andsell prices to anticipate for these difficult conditions.