MARKET INSIGHTS
January 20, 2001

Retail expected to lead downturn in commercial real estate despite record setting 4th quarter of historically low delinquency costs

What: Just released 4th quarter Giliberto-Levy Monitor statistics showed a continuation of historically low loan delinquency costs in the $1 trillion commercial real estate industry. But the eight-year trend is expected to change beginning with the 1st quarter of 2001. John B. Levy, Monitor co-author thinks that despite the most recent record lows in delinquency costs there will be an increase in losses. Says Mr. Levy the real estate downturn will be led by a decline in retail space, a different scenario than the early 1990s when the industry was dragged down primarily by a glut of new office space and no tenants. Recent announcements about retail store closings and employee layoffs will create similar conditions in commercial real estate this time. Mr. Levy also reports that delinquency costs could increase by nine-fold and still be considered within the average range of rates the past 35 years.

Who: John B. Levy, co-author of The Giliberto-Levy Monitor, is available to discuss his forecast for a decline in commercial real estate and how changes in Federal Reserve interest rate policy will affect the sector. Mr. Levy can also provide further information on other Monitor statistics. Mr. Levy’s perspective is especially valuable since the Monitor is the most extensive tracking service following commercial real estate. Mr. Levy is President of John B. Levy & Company, Inc., a real estate investment-banking firm founded in 1995 and headquartered in Richmond, Virginia. John B. Levy & Company raises equity and debt for developers and owners of commercial and multi-family projects.

About the Monitor: The Giliberto-Levy Monitor, a quarterly publication, which analyzes the performance of commercial mortgage investments, has developed an exhaustive database including tracking information on the commercial real estate industry collected over the past 35 years.

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