Another major holding, Duke Realty Corp., specializes in office and industrial properties in the Midwest and on the East Coast. Although the company has more debt than some of its competitors, and the markets it specializes in are still somewhat soft, Beam believes that the firm's financial picture will improve once it raises more equity in the public market.

CommonWealth REIT, the fund's fifth-largest holding, owns a portfolio of office and industrial properties around the country. Beam says that the firm is more protected from downside risk than some of its competitors because its leases pass expenses through to tenants and have fairly long durations.

Residential REITs represent about 9% of the portfolio. Beam likes the apartment business, since the supply of available apartments has dwindled and rents are trending up as people become disenchanted with home ownership. The fund's fifth-largest holding, Apartment Investment & Management, takes advantage of the trend by acquiring and managing affordable apartment complexes throughout the U.S.

Despite continued weakness in the real estate market, Beam sees better times ahead, though he admits they may be a few years off. "I've gone from chief grouch here to chief cheerleader," he says. "I believe the government stimulus headed off what could have metastasized into a calamitous situation.

Eventually, I think those efforts will yield great results."

   

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