FOCUSED ON THE FUTURE OF THE FIRM AND ITS CLIENTS, CONDO.COM’S FOUNDER AND CEO SEES A WORLD OF OPPORTUNITIES – AND A COMPANY WELL POSITIONED TO TAKE ADVANTAGE OF THEM

HOW DID YOU COME UP WITH THE IDEA FOR CONDO.COM?

Sure. I started my career as a public finance attorney with Greenberg Traurig and then transitioned in the early nineties to the web. Me and a partner began an e-commerce company in 1993, selling cellular phones and accessories over the web and through print catalogs. We were very early to the web and in fact built some of the first e-commerce stores for AT&T and Ericsson. We sold the company to a division of Federated Department stores at the end of 1999, before the .com meltdown occurred.

I then joined Swerdlow Group, our family development business, and helped build and lease some of the region’s biggest data centers for Telefonica, Exodus and BellSouth. As the market changed, Swerdlow Group began to develop multi-family projects throughout the State. It was literally while driving to one of our projects in Daytona Beach that a colleague and I hatched the idea for Condo.com. We kept seeing billboard after billboard of condo projects during the 5-hour drive, typically with a girl in high heels by the pool of a preconstruction building. This was the middle of 2005 and it became clear to us that based on the growth of billboard ads and the swelling of lifestyle magazines with condo ads, that we were going to have a problem. It was somewhat analogous to the .com bubble and we realized that in the next few years there would be an unprecedented number of condos around the world that developers, brokers and agents and individual sellers would need to liquidate.

We decided at that very moment to build an online marketplace to create liquidity for everyone in the market. We initially launched as US Condo Exchange, along the lines of a stock exchange since condos are somewhat of a commodity. They can trade sight unseen and are often purchased, in the case of pre-construction, before they are built. We acquired both the Condo and Condos.com domains last year and are now aggressively building Condo.com into the leading online condo marketing brand in the world.

WHAT ARE YOUR THOUGHTS ABOUT THE CURRENT REAL ESTATE MARKET?

Low interest rates, extremely liberal lending policies and a transition of investment dollars from the stock market to real estate, created the perfect storm. As a result of the credit crisis and unprecedented supply of housing across the country, the market is clearly experiencing a correction. However, we’ve been correcting for close to three years now as prices peaked in Q3 2005. In many markets prices are off 25-30% in single-family and multi-family projects and re-sales. The encouraging news is that the trend is no longer getting worse. Also, housing starts have been off by almost 50% and residential construction is close to 15-year lows. This will slowly bring back healthy inventories to the market. Nationwide we are at a 10-11 month supply where a 5- month supply is considered healthy. As prices stabilize now, we will also begin to see housing affordability back in line with incomes. Typically 19% of monthly income was being used to service conforming mortgages on home purchases. During the boom, this went up to over 25% as prices rose faster than monthly incomes. As prices come down, we’ll get back to normal affordability levels and will start to see increased absorption.

HOW WILL SOUTH FLORIDA WORK ITS WAY OUT OF THE CONDO GLUT?

South Florida is a very resilient market and will come out of this downturn fine. There are currently over 75,000 for sale condo listings on the market in South Florida which includes Miami-Dade, Broward and Palm Beach. There are 20,000 additional units that will come online in the next 12 months. Despite all of the existing and pending inventory we are bullish on the market for the following reasons:

1. Migration into the State – It is anticipated that over 1.3M baby boomers (65+) will relocate to Florida over the next decade

2. Value – the prices have come down during the past 2.5 years and when compared to other global markets, Miami is still a value on a price per square foot basis

3. Currency strength – the Euro and other foreign currencies are still very strong against the dollar, making investments in our real estate a true bargain of up to 50%

4. Flight capital – there is still capital coming out of Venezuela and other areas in South America of political or economic instability. This capital will get invested in real estate

5. Increased demand – as we see fuel pass $4 per gallon, people are starting to choose the urban core as opposed to the suburbs. Living in a condo a few blocks or walking distance to work can save a person several thousand dollars per year

6. Decreased prices – In addition to sellers and developers dropping prices to move inventory, banks, in instances where they take projects over from developers, will drop prices as they eliminate the equity and junior debt from the equation

7. Great weather – the weather and ocean will always make South Florida a location where domestic and international buyers will look for primary and secondary homes

8. Favorable taxes – the lack of a State income tax makes the State a great place to own real estate

HOW DOES CONDO.COM PLAY A ROLE IN HELPING

THE INDUSTRY?

As a global advertising portal, Condo.com provides international exposure to over 15 millions buyers each month on a network of partner sites. This exposure to international markets is producing sales of condo units and projects that would ordinarily not be able to cost effectively access these foreign buyers. Our mission is to: (i) help sellers effectively market; (ii) provide buyers with a superset of all condo listings to search; and (iii) help condo residents and other professionals access a definitive database of condo-related information and the buyers and sellers that are part of our growing marketplace. We like to think we are helping to fuel a recovery in the condo market. In June, for example, we had over 1 million visitors to the site that collectively spent over 50,000 hours and conducted more than 800,000 searches. This activity resulted in over 15,000 leads for properties in excess of $25B.

CAN YOU DISCUSS THE NEW PARTNERSHIP YOU HAVE WITH RAICES?

Last month we met with the founders of Raices in Miami “Fabio Ostroviecki”, and created a joint venture between our companies. Raices is the leading global real estate magazine and it made sense for us to have a bestin-class print partner. Raices’ global circulation helps to further expand our brand and allow us to increase the offerings to our clients by now also offering exposure in the magazine. The quality of the magazine itself, in terms of the paper and production values, is superb. The class of advertiser is also top notch and fits within our target demographic. The partnership will also enable Raices to place promotional codes in the print magazine for projects also featured on Condo.com. As marketers become more sophisticated, they expect tracking and a clear path to ROI. By having links from the print and digital versions of the magazine to the buildings and units listed on Condo.com, we can provide the advertiser with concrete and measurable results. We are excited about the complementary product line extension and partnership with Raices, Fabio Ostroviecki and Jack Haime.