REITs bigger, better than ever speakers tell NACORE forum.

The NACORE New York City Chapter played host to four REIT operators at its recent luncheon at the Yale Club: William S. Friedman, CEO of National Income Realty Trust; David J. Nettina, executive vice president of SL Green Realty Corp.; Alexander C. Twining, vice president of development, Avalon Properties, Inc.; and David S. Winton, vice president, KIMCO Autofund.

According to Friedman, real estate investment trusts make up an enormous part of real estate today. "Expansion is like a mantra for all REITs nowadays," said Friedman, a lawyer who has been in the real estate business for nearly 30 years. "You have to be extremely 'hands on' in terms of efficiently expanding a real estate company and maximizing the value of its properties."

National Income Realty Trust operates nationwide, focusing on improving undervalued multi-family properties and repositioning them in the marketplace. The company looks for special situations where a higher rate of return can be achieved through improved management. Its investment pace has increased this past year to approximately $50 million, half of which has gone into the development of luxury apartment properties. Projects are underway in Georgia, Florida, Texas, and Connecticut.

While the 1990's generation of REITs are sounder investment opportunities than the highly leveraged, debt-oriented REITs of the early 1980's, some observers are dubious about the staying power of the vehicle, which in the past contributed to overbuilding and the debacle that followed. Today, the companies are more liquid - and maintain more professional objectives. Since 1992, prices of the 216 REITs tracked by the National Association of Real Estate Investment Trusts (NAREIT) have risen an average of almost 18 percent. But can the momentum continue?

By definition, a REIT is similar to an investment company. It manages a portfolio of properties, often specializing in a particular type of property, for the purpose of earning profits for investors. To qualify for special tax treatment, at least 95 percent of gross income must be from dividends, interests and rents from real property.

"REITs enable real estate managers to refinance debt and consolidate interests in properties," said David Nettina, SL Green's executive vice president. "As a public entity, the vehicle provides capital for building and managing the portfolio and positioning the company for growth."

SL Green Realty Corp. primarily owns, manages, leases, acquires, and repositions Class B office properties in emerging, high-growth submarkets of Manhattan. It is the only publicly-held equity REIT that specializes exclusively in Class B properties. Since going public in August 1997, SL Green has acquired 10 new properties, including 17 Battery Place, 110 East 42nd Street, The Graybar Building and 1466 Broadway.

Avalon Properties, Inc., based in Wilton, CT, specializes in apartment complexes. The REIT is merging with San Jose, CA-based Bay Apartment Communities to form Avalon Bay Communities, which will stretch from coast to coast. Avalon grew out of Trammel Crow Residential and went from ownership of 7,000 apartments to 40,000 apartments and $4 billion in assets. As Avalon Bay, the REIT will own 140 complexes in 15 states and Washington, DC.

David S. Winton, vice president of KIMCO Autofund, spoke to the audience about the first auto mall realty trust, which he started with the former president of Chrysler. Established in 1997, it is a consolidation of franchises owned by auto dealers. Under REIT regulations, owners are required to separate their assets from real estate.