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December 26, 2006


Lance Paddock

I will have to disagree on REIT's. While the impact of green technologies and approaches might be what you think they are, REIT's are so overvalued at this point it really doesn't matter. REIT's primary return is from their yield, which is at this point well below anything I have experienced and significantly below that of Treasury bonds. This yield is not tax advantaged like traditional equities to boot.


Lance, thanks for the comment...I really appreciate the thoughtfulness. Plus, I really enjoy hearing other people's opinion on real estate issues, especially how green technology influences real estate. So, let me clarify a bit...as it stands, and as far as I know, there are no green REITs. I believe that part of this stems from the fact that there is no incentive for REITs to invest heavily in green properties because the tenant or a third party management company typically bears the burden of the energy costs, not the REIT. So, my original line of thinking was that if there were such thing as a green REIT, over the long-term (10-15 years), they would experience stronger operating margins, which would offset any premium they might pay to purchase or build the sustainable structures-->leading to a healthier investment and making the green REIT a good diversification to an investment portfolio.


I think that may be a good point, and it would certainly make sense for REIT's to consider such approaches even if they were not "green" per se.

James Morgan - Puritan Financial Advisor

REIT's are designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks.

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