Anticipating emerging trends in the marketplace.

As we begin the new year Himmel + Meringoff Properties is optimistic that the national 2003 economic recovery reported statistically for business will be realized locally in the New York City economy in 2004.

National economic recovery has been evidenced by increases in the GDP, employment growth and consumer confidence index.

According to the United States Labor Department, worker productivity increased at an annual rate of 9.4% in the third quarter of 2003, its highest rate in 20 years. hese productivity gains will help companies' bottom lines so they can be less focused on cost cutting and more focused on business expansion with increased job creation.

Moreover, the rebound on Wall Street, with an increase in merger and acquisition activity, should spell increased local hiring for 2004. Improvements in the job market will add momentum to the economy.

We continue to aesthetically enhance our buildings and reposition our properties. For example, at 360 Lexington Avenue, our most recent acquisition, we transformed the lobby space with the installation of two significant artistic pieces chosen by Art Assets LLC.

Both works, a large sculpture and painting, complement the interior space and address the energy and magnificence of the building's locality, just blocks from Grand Central Station and the Chrysler Building. The sculptural relief, Kind of Blue, is approximately six feet high and five feet wide, and was fabricated in blue-painted aluminum by Kevin Barrett, who exhibits his work in galleries and museums nationally. The portrait, an acrylic on canvas abstract expressionist landscape, Reason to Believe, is approximately five feet high and ten feet wide, and was painted by Ronnie Landfield. Mr. Landfield's work is included in New York City and national museum collections.

We have added a dramatic wraparound sign with tremendous visibility to our Times Square property located at 729 Seventh Avenue, on the corner of 49th Street. The sign features an enormous, upside-down Maker's Mark whiskey bottle spanning floors fifteen through eight, and pouring whiskey with iridescent effects down into a glass situated at the fourth floor. We are proud of this creative visual artistry reminiscent of the famous Coca Cola and Eight O'Clock Coffee signs that have been featured prominently in the area.

The repositioning of 1114 First Avenue, located at East 611st Street, included a retail upgrade. The original retail tenant, who had been in possession for over ten years, was a liquor store and the entire storefront needed refurbishing. We upgraded the retail facade with a new aluminum storefront featuring a clear anodized finish, enhanced lighting and large glass display windows on both First Avenue and East 61st Street. We now have Straight from the Crate as the retail tenant. Our property is adjacent to the successful Bed Bath & Beyond Store.

When we purchased this property over five years ago, we foresaw a change in the neighborhood, which has been evidenced by the two new residential towers next to the property, and the increased retail traffic in the area. Himmel + Meringoff Properties continues to target emerging neighborhoods for property acquisitions.

In the financing arena, we took advantage of historically low interest rates.

We refinanced in excess of $80,000,000 in 2003, at a minimum of a two to three point rate savings, and locked in these rates with long-term mortgages. Although Federal Reserve Chairman Alan Greenspan has taken the recent position of keeping the fed funds rate low for the immediate future, we believe that rates will rise significantly after the November Presidential election.

In the political arena, after serving on REBNY's Board of Governors for three years, I was elected to the Executive Committee. Additionally, efforts are ongoing with the work of REBNY's Economic Development committee, which I continue to co-chair. In 2003, the committee presented to City Councilwoman Melinda Katz of Queens and Andrew Alper, President of the New York City Economic Development Corporation, its Sustaining Growth report which focuses on zoning and other economic measures to attract new businesses. Further more, committee members met with Deputy Mayor Dan Doctoroff to discuss various incentive programs to draw new business to the city. Our work in 2004 will be to continue to work with city officials, starting with Richard Barth, the Executive Director of the Department of City Planning.

Himmel + Meringoff Properties is commencing its third decade in business. Our emphasis remains on building upon our strong foundation and years of experience to structure creative purchases. We aggressively seek prospects to purchase 100% property interests, as well as opportunities to structure net lease and innovative transactions that can help solve a seller's tax and leasing challenges. Additionally, we are increasingly being presented with acquisition scenarios that can capitalize on our long-term experience with secondary commercial office buildings.