In October of 1992, I spoke to the NAREIT Annual Convention in New Orleans. I opened my speech by referring to a bumper sticker that I had seen in Texas in the mid-80s. The bumper sticker said, "Please God, give us one more oil boom and we won't screw it up this time." Hard times are beneficial for the lessons they teach us. Hopefully we have all gained a lot of humility and experience, and learned a few lessons, from what has happened to the market for REITs since 1998.

We have learned that just because things can be done, does not mean they should be done. As tempting as it may be for some, REITs should not issue equity and dilute current shareholders just because current market conditions allow it.

We have learned that obfuscating financial results without consistency and predictability challenges our credibility. It is the safety and stability of our cash flow and our total return to shareholders that make us attractive.

We have learned that new technology is creating all kinds of interesting challenges and exciting opportunities. Sharing ideas with investors and the analytic community is healthy and shares knowledge. However, hyping new initiatives as 'Valhalla' will only lead to future disappointments.

We have been called "boring real estate stocks" and that's okay. We don't want to have stock prices that fluctuate sixty percent in a day. Recently, Wall Street strategists have called us a "safe haven" from a volatile market. That is where we want to be.

And lastly, we have learned that selling REITs as growth stocks created unrealistic expectations and high levels of disappointment. We have been called "boring real estate stocks" and that's okay. We don't want to have stock prices that fluctuate sixty percent in a day. Recently, Wall Street strategists have called us a "safe haven" from a volatile market. That is where we want to be.

Lately, we have seen significant increases in REIT share prices as investors have sought shelter from the volatility of the markets. Between March 10 and May 18 the NASDAQ dropped 29.9 percent while the NAREIT Equity Total Return Index is up 12.9 percent. It is an opportunity for REITs to prove themselves as a stable and essential part of a balanced portfolio. And much opportunity still exists as REITs are, on average, trading at a discount to NAV.

Let's continue to focus on the fundamentals and incorporate that which we have learned into a 21st Century strategy that will make us beacons of security and stability in volatile waters.

Sam Zell
Nareit chair