I can distinctly recall a conversation I had three years ago with this issue's cover subject, Sam Zell. Sam was encouraging me to become more involved in industry affairs, and with NAREIT specifically. To be candid, I was reluctant. I wasn't completely convinced that the issues I viewed as most important headed NAREIT's agenda at the time. As far as I was concerned, improving financial reporting, getting REITs added to the major indices and advancing corporate governance were the areas where NAREIT should focus its resources.

Needless to say, Sam won me over. As I write this, my first column as NAREIT's chair, I can see that the cumulative efforts of my predecessors have created an organization focused on our industry's most pressing objectives and equipped it with the resources to accomplish them. From the time of Sam's initial involvement in NAREIT and continuing through the term of our most recent chair, Steve Roth, NAREIT has grown to better reflect and represent the industry that REITs and publicly traded real estate have become.

With respect to the three priorities I discussed with Sam, NAREIT has forged notable change in each area. On the accounting side, it was critical that the industry make its financial reporting comparable to the rest of corporate America in terms of transparency if we hoped to attract and retain a larger investor base. The evolution of funds from operations (FFO) has brought us closer to generally accepted accounting principles (GAAP). Going forward, our continuing challenge will be to keep the metric's definition in line appropriately with both GAAP and SEC expectations, and to see that every company conforms to that definition.

Without being too presumptuous, I think it is safe to say the second objective, inclusion of REITs on the major indices, is a mission accomplished. When Standard & Poor's tore down its longstanding barrier to REITs, it gave the industry a shot in the arm. To date, there are 20 REITs in S&P indices, including six in the S&P 500.

Before it became commonplace, Sam and I talked about how essential it was that the publicly traded real estate industry's corporate governance practices be above board on all fronts. Now that the focus on governance across corporate America has been sharpened, I think we have a real opportunity to tell our story: REITs measure up as well, if not better, than companies in other industries.

Make no mistake, NAREIT and the industry have made great strides on all three of these issues. For the first two, there is certainly more work to be done, but it is incremental to the accomplishments already reached. The larger challenge going forward lies with corporate governance, which is an issue I expect to advance this year.

The real estate industry has been fortunate to have a great number of excellent leaders pave the way for the milestones we have achieved and make possible the accomplishments yet to come. Starting with this issue and Sam Zell, Portfolio will periodically recognize some of these individuals. I thank Sam, immediate past Chair Steve Roth and all the others who have come before me. I look forward to working with all of you to ensure that we continue building on our industry's success.

Hamid R. Moghadam
NAREIT Chair
Chairman and CEO, AMB Property Corporation