Caution prevails in an office market marked by uncertainty.

With the fabric of New York irrevocably torn by the World Trade Center attacks, the aftermath within the New York region, compounded by an already slowing economy, will continue to reverberate within the real estate market.

We begin 2002 in a holding pattern that anticipates no quick fixes or any dramatic bounce back in the real estate industry. The byword is caution, as people wait on the sidelines, hesitant to plunge into the current market with its many unknowns, among them, the short and long-term economic viability of downtown's commercial office, retail, hospitality and residential sectors; whether displaced companies who have moved to New Jersey or the suburbs will return to Manhattan; whether tourism and retail can recover to pump lost millions back into the New York City economy.

These and other economic concerns have created significant changes in the lending market. Clearly, commercial lending institutions are more hesitant to provide financing and are tightening underwriting standards. Borrowers have begun to experience difficulties, whether through an inability to make mortgage payments, or the lender indicating anxiousness about its portfolio. Very sharp, recent rises in insurance costs have also negatively effected real estate and underwriting performance.

The uncertain and softening real estate market has spurred momentum for unconventional lenders, such as BRT, to step into the breach by providing short-term financing solutions where conventional lenders are unable, or unwilling, to do so. BRT has, for example, received a significant number of inquiries from building owners seeking bridge loans on income-producing assets to allow time to undertake retenanting of properties that are, not completely leased and/or recently vacated.

We expect bankruptcies and foreclosures to rise in the current economic environment, witnessed by the increased number of inquiries about both in attorneys' offices. For business owners facing foreclosure or bankruptcy, bridge lenders offer the opportunity, via a short-term loan, to buy their first mortgage loan at discounts or to assist the borrower in work-outs. While conventional lenders are not an option for those coming out of bankruptcy, short-term lenders will at times finance borrowers with lesser crediting ratings, allowing them time to stabilize their financial position. Property owners or business owners in need of an immediate cash infusion can refinance real estate with first, second or mezzanine loans in order to "cash out" equity.

Uncertain markets also create acquisition opportunities. While there has not yet been a significant downturn in pricing, there is a slow but steady, "U", rather than a "V" curve, decline. Potential buyers are waiting on the transactional sidelines as more building owners need to sell.

These potential investors, faced with a time-sensitive opportunity and the probability of having loan applications delayed or rejected by commercial lenders, often turn to bridge lenders, such as BRT, who recognize a borrower's vision of refinancing with a traditional long-term commercial lender by first using short-term bridge financing as the wisest and fastest financial strategy to achieve that goal. They view the higher, short-term rates as a mechanism to make the deal happen, contemplating a relatively quick turnaround with a substantially increased yield once refinancing at lower rates from conventional lenders becomes obtainable. BRT has no exit fees or prepayment penalty on refinance. While the New York City region will eventually, as it has historically, rise above adversity and once again experience stability and growth, in these unusual and uncertain times, short-term financing will be a crucial resource for borrowers in need of lenders who understand the intricacies of complex transactions and ar e capable of quick response.