The initial shock of the tragic events of September 11 has somewhat receded, but the reverberations of the terrorist attacks on our nation—and the sudden jolt to the economy—are likely to be felt for quite some time. Although the publicly traded real estate industry generally fared better than the major market benchmarks when Wall Street reopened after the tragedy, our industry must now position itself to adapt to new economic challenges ahead.

I am confident that our industry, and the men and women who lead it, are up to the challenge. Once again, NAREIT held its annual convention in October, with participants from all over the globe and all sectors of the real estate industry. The convention brought together experienced management teams that have developed disciplined capital deployment plans and intelligent business strategies. These are the leaders of the new breed of public real estate companies populating our industry, and they have the skills needed to navigate it through the potentially turbulent times ahead.

Over the past few years, publicly traded real estate companies have exercised discipline and restraint in new capital deployment, and this will continue to dampen fears of overbuilding. Well-run and well-capitalized public real estate companies will be able to weather these difficult times and emerge even stronger when the economic climate brightens.

Although not completely immune from the prevailing economic weakness today, the underlying fundamentals and balance sheet of the commercial real estate industry are stronger than they have been in any downturn since I entered the industry in 1965. Increasingly, investors are recognizing the significant current income, appreciation and important diversification benefits of investing in real estate stocks. As a result, the public real estate industry is taking its rightful place as an important and vital sector of the stock market. It's up to all of us to continue to carry these messages to both institutional and individual investors.

In the last issue of Portfolio, I concluded, "As we continue to move through difficult and uncertain economic times, the strength of our industry's operating performance will become even more apparent—and more compelling." I believed that was true before September 11— and I believe today.

William D. Sanders
NAREIT Chair