2006 Annual Report A summary of the 2006 Annual Report for Commodore Realty is featured below. You can download the entire  report as a PDF (Portable Document Format, 2mb), where you can read all of the details of our highly successful 37th year in business. Report Summary The American consumer has continued to spend freely throughout 2006 bringing prosperity to the retail segment of the real estate market in spite of the inevitable decline in residential real estate values and the growing crisis in the mortgage market. To date most of the articles call it a crisis in the sub-prime lending market and although something like 13% of sub-prime loans are currently in default nationwide I think its fair to say this will only be the tip of the iceberg. Real estate trends tend to move more like a slow motion train wreck as compared to stock market trends which often move at the speed of a crashing airplane. The real problem involves a lot of creative financing which permitted people to buy beyond their means with teaser interest rates and adjustments that were postponed yet inevitable. As those inevitable adjustments come to pass more and more segments of the market will be impacted by the inability to make the new payment. Since the value of real estate is always ultimately based on a coefficient between the price and terms as the new terms are presented to the owners and future buyers the price will accordingly have to be adjusted downward. As people find them-selves more in debt than the value of their homes, prices will adjust. With these conditions exist-ing, it won’t take much for the crisis to deepen. If productivity declines, unemployment increas-es or the credit crisis broadens to consumer loans, automobile loans, and potentially even to in-vestment loans such as in the leveraged buyout industry, the problem will inevitably spread. I don’t believe there has ever been a time where a credit crisis has not spread to impact the entire credit market once begun and therefore the current “sub-prime” credit crisis if it does so will be a unique situation in history. The Florida residential real estate market has already been significantly impacted by all of this, particularly the condominium market. There is a tremendous oversupply of newly built and un-finished condominiums coming to market just as demand has all but disappeared and as a result at this time it is our belief that selling prices are at least 30% less than asking prices as a general rule in the Florida market. Of course we’ve seen a much larger increase in values than other parts of the country as well and so there remains plenty of room for adjustment. The hurricane season of 2005 has not yet been forgotten and as a result we have escalating insurance costs in Florida that have added to the burden of home ownership and because of increased values ad valorem real estate taxes have soared as well. With all of this we expect that the commercial real estate market will ultimately be affected too since all boats tend to rise and fall with the tide. We feel nevertheless very secure with our properties and enjoy a terrific competitive advantage because of their condition and our solid tenant base. Download full Annual Report File (PDF, 2mb) View full Annual Report file (HTML)