The changing face of asset management.

The steady growth of our asset management division is certainly a tribute to the unique capabilities of our firm, but perhaps even more to the point, it says something important about the changing character of the real estate market here in New York.

Let's be honest. Private and institutional owners are facing tremendously complex challenges today, and to their credit, many have come to the realization that real estate development firms with in-house management, construction and leasing capabilities are better suited to the task of asset management than traditional promotional brokerage firms. That's because the principle function of a promotional brokerage firm is to lease space, while property management and improvement is often an afterthought.

On the other hand, experienced real estate developers with an in-house service capability know how to add value to a property and thereby improve its long-term profitability. By adding value to our own buildings. rather than simply waiting for inflation to increase profitability, our company has earned widespread recognition as an hands-on asset manager with a remarkable track record for achieving bottom line objectives.

While the rest of the market sank deeper in recent years, we purchased,. renovated and leased 333 East 38th Street and 215 Park Avenue South. Both buildings now claim significantly higher than average rental rates and have consistently increased occupancy -- 333 East 38th Street is 100 percent occupied and 215 Park Avenue South is closing in on that mark. And this was accomplished during the worst real estate market New York has ever experienced.

While owners are shifting their perspectives, so too are overseas investors. It seems like only yesterday that foreigners had but one interest when it came to New York commercial real estate - trophy properties located on prestigious thoroughfares. Today, that focus has shifted dramatically and we are finding unprecedented interest from overseas joint 'venture equity partners for properties in our burgeoning sector of the commercial marketplace.

Why? Because if you know how to add value to an older building through an in-house expertise that covers every aspect of the redevelopment process, you can dramatically revitalize the property as well as its bottom line.

There can be no argument that value-oriented management - coordinating all aspects of a redevelopment project with an emphasis on detail and a hands-on approach, ie., inspecting each property everyday, monitoring operational performance and building progress and -tenant capital improvements - improves a property's long-term profitability.

As our roster of overseas joint venture partners expands in the nineties, our formula for success remains remarkably simple -- an emphasis on relationships guided by principals for principals will always yield the highest profit for ownership. Strategic and effective leasing programs, personalized management and creative capital improvements, combined with our relationship across the marketplace, will continue to give all our partners, overseas as well as domestic, a tremendous edge in the Manhattan real estate marketplace.