February 10, 1997

Jonathan G. Katz, Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549

Re: File S7-31-96
Rules Implementing Amendments
to the Investment Advisors Act

Gentlemen:

Allegis Realty Investors LLC (Allegis) is an institutional real estate investment advisor which, with its affiliates, currently manages approximately $4 billion which are invested in a variety of real estate related portfolios. Allegis urges the Commission to clarify its proposed rules (SEC Release No. IA-1601) to clearly authorize Allegis (and other similar real estate investment advisors) to continue registration with the Commission as an investment advisor under the Investment Advisers Act of 1940 (the "Advisers Act").

Allegis believes that the proposed rules create substantial and unnecessary uncertainty as to whether our national pension real estate advisory business will be permitted to continue its long-standing federal investment advisory registration. De-registration would have an immediate, adverse effect on not only our company, but on our institutional real estate investment clients and on national real estate markets generally. We strongly urge that the proposed rules be revised to permit real estate advisors that provide investment services to institutional clients, such as pension plans, on a national basis to continue to be registered under the Advisers Act.

Allegis is registered with the Securities and Exchange Commission as an investment advisor (SEC File Number 801-45426) and Allegis and its predecessor organization, Aetna Realty Investors, Inc. have been registered with the SEC since 1994. Allegis and its affiliate AgriVest LLC have total assets under management of approximately $4 billion dollars in a variety of real estate and mortgage assets located in a total of 27 states on behalf of a national group of institutional investors, including approximately 250 ERISA and governmental plans, as well as foundations and other institutional clients. Allegis has 104 employees in five states.

The treatment of institutional real estate advisors provided under the proposed rules came as a surprise to us, as the text and legislative history of the Investment Advisers Supervision Coordination Act did not appear to evidence any Congressional intent to selectively de-register the members of our industry. Regardless of the outcome of the final rules, the Commission will continue to be required to regulate many institutional real estate advisors anyway, and the variety of methods contained in the proposed rules to select those that would not be subject to federal registration will lead to inconsistent and unintended results and ineffective regulation. Moreover, selective de-registration would or may result in immediate violation of laws or policies of governmental pension plans and in the violation of ERISA by private pension plans and third parties engaging in transactions with such plans. Moreover, selective de-registration would result in significant confusion, expense and hardship to real estate advisors, private and public pension plans and third parties dealing with these investors in the marketplace.

In addition, we are concerned that the proposed "exemption from state registration" provisions of the proposed regulations do not themselves provide an appropriately certain basis upon which a national pension fund real estate advisor should have to rely. For example, the home state of the advisor may determine that it no longer wishes to observe the "institutional" exception in its investment advisor regulation, and this change in policy at the state level could result in national pension fund real estate advisors having to de-register themselves at the federal level because of a state-level decision. Indeed, we understand that Connecticut is currently considering eliminating its "institutional" exemption from its act. We would strongly urge that the "exemption from state registration" provision be strengthened so that it is clear that national advisors be permitted to register at the federal level, regardless of inconsistent state regulation.

Accordingly, we believe that the final rules should:

Clarify that institutional real estate advisors properly come within the pension consultant exemption.
If real estate advisors are not clearly included within the pension consultant exemption, there should be a specific exemption for advisors who provide investment advice on real estate-related portfolios on a regular and continuing basis for a national client base or a national portfolio of properties.
Provide further guidance that a "securities portfolio" includes securities of entities that hold title to real estate or real estate-related assets, whether wholly owned or not.
Strengthen the "exemption from state registration" provisions.

Finally, Allegis wishes to indicate that it strongly supports the letter submitted on behalf of the National Association of Real Estate Investment Managers by Messrs. Meter, Brown & Platt on or about the date hereof, of which Allegis is a member. Of course, we would be pleased to discuss any of these matters further with you at your convenience.

Very truly yours,

Matthew H. Lynch