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Starwood and The Related Group Form a Joint Venture
to Develop a New Build St. Regis Resort & Residences
on the Existing Site of the Sheraton Bal Harbour

. Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) and The Related Group of Florida announce that they have signed a letter of intent to form a joint venture to develop a new build St. Regis Resort & Residences in South Florida's most exclusive enclave, Bal Harbour. The St. Regis Resort & Residences, Bal Harbour, to be built on the existing site of the Sheraton Bal Harbour, will be located on the white, pristine sands of the Atlantic Ocean directly across the street from the legendary Bal Harbour Shops. The renowned Lucien Lagrange Architects has been selected for the project. The proposed transaction is subject to the negotiation and execution of definitive agreements and other approvals and customary closing conditions.
"Related's innovative development expertise in project conceptualization, mixed-use development, and sales and marketing of upscale residential projects in the South Florida market is a perfect complement to Starwood's ultra-luxury brand, loyal customer base and its existing untapped real estate holdings," said Steven Heyer, CEO, Starwood Hotels & Resorts. "We expect that this relationship will allow us to maximize the unrealized potential of our land assets while enhancing the strength of Starwood's presence in this affluent market."

"We see a huge potential in developing the St. Regis Resort & Residences, Bal Harbour as a preeminent address for first-class luxury living in Miami," said Jorge M. Perez, chairman, The Related Group of Florida. "The powerful combination of the St. Regis brand, the distinguished reputation of Lucien Lagrange Architects', and Related's integrated development approach will make the St. Regis Resort & Residences, Bal Harbour a spectacular new addition to the seaside Bal Harbour village."

Only a select few of the world's luxury hotels merit the St. Regis name, offering unprecedented excellence in standards of hospitality and elegance. The St. Regis Resort & Residences, Bal Harbour will feature an array of sumptuous amenities, including the brand's signature butler service, renowned concierge service, a world-class spa and a signature restaurant.

The Bal Harbour Shops, ranked "the number one shopping center in the U.S." by Women's Wear Daily and home to 100 flagship stores including Hermes, Gucci, Prada, Dolce and Gabbana, Chanel, Louis Vuitton, Saks Fifth Avenue and Neiman Marcus. The Bal Harbour Shops also offer their patrons services such as valet parking, personal shoppers, as well as an array of first-rate fine dining options.

The Sheraton Bal Harbour will plan promotional activities throughout the year prior to its anticipated closing in June 2006 to celebrate the hotel's 50 year fabled history. "We anticipate that thousands of guests who have stayed with us over these past 50 years will want to come back and stay with us one last time," said the Resort's Managing Director, Hans B. Altenhoff. "This will be an exciting year for our property; not only will we commemorate our 50th anniversary but we will also provide our guest the opportunity to own their dream home on the beach they have enjoyed all these years." The Sheraton Bal Harbour's 50 year anniversary celebration which kicks off this spring, will incorporate promotions with the luxury brand emporiums located at the Bal Harbour Shops via an exclusive "Passport to Bal Harbour" offering available only at www.sheraton.com.

The Related Group of Florida has 25 years of residential development and construction experience of condominiums and urban mixed-use properties, primarily in Florida. Some of Related's landmark projects in South Florida include the Icon, Murano, Murano Grande, Portofino Towers and Oceans I, II and III. The company works closely with its New York affiliate to acquire commercial and residential real estate throughout the US. Related's marketing partnership with RCRS (Related Cervera Realty Services) will offer years of selling expertise in the luxury South Florida real estate market.

Lucien Lagrange Architects has roots in both the innovative architectural legacy of Chicago and the classic design heritage of Mr. Lagrange's native France. The dichotomy results in a firm that is uniquely creative yet sensitive to a timeless aesthetic. In a relatively short time, Lagrange has made a significant mark on the Chicago skyline. Its projects - new buildings and comprehensive renovations - are prominent both in the Loop and on the Near North Side. One of the latest is the new 67-story Park Tower hotel and luxury condominium development on North Michigan Avenue.

Local architect, Sieger Suarez, has been selected as the architect of record and has long been unrivaled as South Florida's leading architectural firm specializing in luxury residential high-rise design. Taft Bradshaw, the original landscape designer for the Village of Bal Harbour and the Bal Harbour Shops, has been chosen as the landscape architect.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 750 properties in more than 80 countries and 110,000 employees at its owned and managed properties.

This press release contains forward-looking statements within the meaning of federal securities regulations.

REAL ESTATE

Home prices continue steep rise

Broward and Miami-Dade home prices continued climbing skyward in June, as home prices nationwide leaped at the biggest rate in more than two decades.

Amid fretting that soaring home prices are hitting unsustainable heights, South Florida existing single-family home prices continued a dizzying rise in June, while home prices nationwide jumped at the fastest clip in nearly a quarter of a century.

The median price of a home in Broward soared 29 percent in June compared to June 2004, and prices in Miami-Dade surged 27 percent, according to figures released Monday by the Florida Association of Realtors.

Across the country, existing single-family home prices jumped 14.7 percent in June from a year earlier, the National Association of Realtors reported. That marks the biggest increase since November 1980, the Washington, D.C.-based trade group said.

''I have never seen a time like this,'' said Marilynn Obrig, a real estate broker at Intercoastal Realty in Fort Lauderdale with 26 years experience. ``I have seen a lot of ups and downs, and this is the longest up.''

In Miami-Dade, the median price of a home in June was $363,100; in Broward it was $378,000. Those prices mark hefty gains from just the prior month, May 2005, when a median-priced home sold for $354,600 in Miami-Dade and $367,000 in Broward.

Statewide, the June median price jumped to $248,700, a 31 percent rise compared to the same period a year ago and more than double the price of an existing single-family home in Florida five years ago.

Nationally, the median price for all types of housing now stands at $219,000. The median price is the point at which half of the homes are sold above and half sold below.

Experts attribute the roaring housing market to a range of factors, including stubbornly low interest rates and home-financing mechanisms like interest-only mortgages that enable people to buy homes they otherwise couldn't afford.

Observers say South Florida's robust job growth -- unemployment for instance is at a 20-year low -- is helping fuel the price gains. Meanwhile, the supply of South Florida homes remains exceptionally tight as the region continues to be a favorite for second-home buyers in the Northeast, Europe and South America. In addition, many investors now prefer real estate over the stock market.

But the lofty price hikes continue to raise concerns. Affordability, even for relatively well-paid wage earners, is becoming an increasing problem. Some employers and recruiters consider rising home prices a primary impediment to the region's economic development, because people can't afford to move here.

And the galloping market in South Florida, across the country, and in many parts of the world, has spawned worries the housing market is over inflated and poised for a tumble.

Last month, The Economist, a respected news magazine, asserted that the global housing boom is ``the biggest financial bubble in history.''

Yet many local observers contend the worst that will happen is a market wide slow-down in the rise of prices rather than a decline.

Bradley Hunter, South Florida regional director for research firm Metrostudy, said home prices are ''sticky,'' adding: ``If someone owns a real estate asset, especially if they are living in it, they can just hold rather than sell at a loss. A lot of people will have lost value in their house but won't realize their loss in a financial sense because they won't sell.''

Hunter predicts prices will begin to cool next year. And one real estate broker said there is already anecdotal evidence of a softening.

''The breaks are starting to be applied,'' said Jo Sumberg of the Masters Brokers Forum and Avatar Real Estate Services in Coral Gables. ``While people are asking crazy numbers, they are not getting them [sold] as fast.''

Some economists suggest that China's recent move to link the yuan to a basket of foreign currencies rather than solely the dollar may push up U.S. interest rates, which in turn would make real-estate mortgages costlier, damping housing demand.

Meanwhile, the number of existing single-family homes sold in South Florida in June was mixed. Broward was down 15 percent in June compared to a year earlier and Miami-Dade volume was up 2 percent.

Watching as the Miami real estate market soared, Alexander Midler decided to make his move.

After eyeing a number of condo projects, the 32-year-old Boston software engineer recently settled on a one-bedroom condo at Jade Beach in Sunny Isles near North Miami Beach.

The price: $800,000.

It wasn't the cheapest place he found, but he figured an oceanfront view in an exclusive building filled with wealthy South Americans and Europeans would buffer him from a potential economic or housing downturn.

"I was looking for the safest investment I could make," said Midler, who is planning to move to Miami in a couple of years.

And with condos in the immediate area appreciating as much as 75% annually, Midler figured that he might sell the unit before he closed and make a tidy profit.

That would make him one of the market's many "flippers," people not looking for a place to live, but rather a way to make a quick buck.

While some booming housing markets have cooled, Miami's continues to get even hotter. With land scarce, most of the growth is coming from high-rise condos.

In Miami, nearly 70,000 condo units are under construction or in the pipeline, including high rises designed to soar more than 70 stories.

Miami home prices, which include condos, have shot up about 30% over last year. Relative bargains just five years ago, the average condo now costs about $300,000.

"We are going through the greatest expansion in housing in south Florida � particularly in Miami- Dade � in its history," said Michael Cannon, president of Integra Realty Resources-South Florida.

A long period of low interest rates has fueled a housing boom nationwide. Miami stands out as a relative newcomer to the hot list of markets and for the sheer number of new condo projects under way.

Fueling demand are buyers from South America and Europe as well as second-home seekers from the Northeast, real estate watchers say.

In addition, a growing number of permanent residents with high paying jobs are moving into the area.

Along with Tampa, Miami in the first quarter led the nation with the sharpest increase in available jobs paying $100,000 or more, according to a survey by TheLadders.com, an online executive search firm.

"We have almost 200 people moving to Miami and Fort Lauderdale every day and who knows how many second-home buyers," said Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, or EWM, one of the largest realty firms in the area. "That means by the end of the week there will be at least 1,400 people who want to live in the area, or 6,000 new people a month."

Lack of supply is putting a lid on unit-sales growth.

"Our unit sales for the last two months are less than a year ago and the sole reason is we just don't have enough homes to show people," Shuffield said. "In some neighborhoods, we don't have anything to show."

Miami-Dade has just 2.8 months supply, Shuffield says. Just north in Broward County, which includes Fort Lauderdale, supply is at a record low 1.9 months. That compares to about five months of inventory nationwide.

Even with all the new supply in the pipeline, real estate observers don't expect the south Florida market to crash like it did in the mid-1920s and 1980s and early 1990s, when unsold units glutted the market.

"When you leave the beach and drive west in Miami or Fort Lauderdale you only have about 20 miles of dry land," said Shuffield. "We have now built on almost all of it."

Since there's little room to build on, developers are going vertical. They're targeting neglected areas in or near downtown and any vacant parcels near the water.

Just two years ago, single-family homes in Miami made up the majority of EWM's sales volume. That number is now reversed, with condos accounting for 58% of sales and single-family homes 42%. In Miami Beach, condos are 87% of EWM's total.

Many buyers are investors, or so-called flippers. They lock in at discounted pre-construction prices and sell as soon as they are able. Sometimes even before closing.

So far, they've found plenty of buyers willing to pay up.

"Condominiums have almost become a commodity," said Jorge Perez, chairman of the Related Group of Florida. "The (stock) market fluctuates daily. Oil is up, it's down. A lot of people are saying they feel more comfortable with a more tangible investment."

Developer Perez is happy to oblige. His firm has 14,000 condo units under construction, most of them in Miami.

They include the 60-story luxury project Icon Brickell, designed by the architectural firm Arquitectonica, whose trendy early buildings were featured on the TV series "Miami Vice." Interior design is by the well-known Philippe Starck.

The first 750-unit Icon tower sold out in two days. His most expensive project, the Apogee, just broke ground at the southern tip of Miami Beach. Units sell for $4 million to $15 million. "We have four units left. So come and get it," Perez said.

Shuffield expects real estate prices to eventually soften, but he's not too worried.

"This is like an escalator," he said. "The escalator may slow down a bit, but it always keeps moving. So it's just a question of what step you want to get on."

Builder confidence in the market for newly built single-family homes barely budged in July, edging down two points from an upwardly revised reading in June to a level that matches the strong index average for the year as a whole, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI).

"Builders have every reason to remain confident in the single-family marketplace," said NAHB President Dave Wilson, a custom home builder from Ketchum, Idaho. "While mortgage rates have risen slightly in recent weeks, financing conditions remain very favorable to families considering homeownership, and demand still outpaces the supply of new homes in many markets."

"July's HMI reading of 70 is right in line with the elevated index average for the year to date, and upbeat builder attitudes point toward continuation of strong sales and starts of single-family homes in the months ahead," said NAHB Chief Economist David Seiders. "Builders are, however, concerned about lot shortages and the high cost of land for development, especially in parts of the Northeast and West. Meanwhile, the relatively weak job market situation in the Midwest has had an impact on builder confidence in that part the country."

Derived from a monthly survey that NAHB has been conducting for approximately 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as either "good," "fair" or "poor."

Builders are also asked to rate traffic of prospective buyers as either "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

July's HMI reading, at 70, is down two points from a slightly upwardly revised reading of 72 in June. It reflects moderate downward movement in both the index that gauges current single-family home sales -- which declined from a robust 77 to 75 this month -- and the index that gauges sales expectations for the next six months -- which declined from an even more robust 80 to a still-solid 77. Meanwhile, traffic of prospective buyers remained unchanged from the previous month's 55 reading.

Confidence gauges declined somewhat for builders across all four regions of the country, with Midwest builders posting the biggest decline, of six points, to a relatively weak 46 reading in July. Meanwhile, builder confidence in the West, Northeast and South was basically unshaken, with a one-point decline registered in the first region and two-point declines registered in the other two to readings of 88, 69 and 75, respectively.

HOTELS DOING WELL: Miami-Dade County is building a solid tourism season in the summer, traditionally slow. According to Smith Travel Research, county hotels averaged 65.8% occupancy in the first week of July, slightly surpassing the national average of 65.6%. It's a 7% increase from the same week in 2004. At the same time, room rates continue to rise. For July 3-9, room rates in the county averaged $105 per night, up 18.5% from 2004. Room rates around the nation and state averaged $88 and $90, respectively.
HOT SUMMER TOURISM: Miami-Dade County areas benefiting most from this month's increase in summer visitors are Miami Beach with 68.8% hotel occupancy, up 4.7% from a year ago, and airport areas with 67.8%, up 8%. Coral Gables also had increases, with hotels 65% full, up 9.6%. Downtown Miami had a 58.5% rate, a 9.8% increase from summer 2004. The Beach had the biggest jump in room rates, 25.4%, with per-night rates averaging $134, followed by downtown hotels at $89, an 11.8% spike. All statistics are for July 3-9, according to Smith Travel Research.
HOME IMPROVEMENT: Camillus House plans a number of improvements to its shelter at 726 NE First Ave., says president Paul Ahr. "We plan on taking down the overhang at Northeast First Avenue and Seventh Street," he said. "There will be significant repainting, and the entrance is to be moved to the side so that visitors have to cross the property. We also plan to have more manpower so that we are able to move people along." The capacity of the shelter will be increased to 50 beds from 26 to accommodate more people during severe weather.
FONTAINEBLEAU ANEW: Fontainebleau Spa & Resort, purchased May 13 by Turnberry Associates of Aventura, is about to undergo a $400 million renovation. The former Hilton property in Miami Beach will be expanded from 1,338 rooms to 1,750. The renovation includes new condo-hotel suites. According to Tom Bruny, the hotel's marketing vice president, construction should start next spring and be complete in early 2008. The hotel is to remain open during renovations.
TRANSIT-FUND HUNT: Officials plan an August trip to Washington, DC, to discuss financing for Metrorail expansions, said Tarnell Carroll, Miami-Dade Transit spokesman. The north corridor project, from 215th Street and Northwest 27th Avenue south to the Martin Luther King station on Northwest 75th Street, is estimated to cost $843 million and be ready in 2012. The $1.3 billion east-west link, to run from the planned Miami Intermodal Center to Florida International University, is to be finished in 2014. The Florida Department of Transportation has pledged to finance 25% of both projects if the federal government provides 50%.
BUDGETING IN AVENTURA: The city commission is to review Aventura's 2006 budget at 10 a.m. today (7/21) at the government center, 9200 W. Country Club Dr. Commissioners also are to set a tentative tax rate for 2005-06. "For the 10th consecutive year, we won't have a tax hike," Mayor Susan Gottlieb said, adding that the city has the lowest millage rate in the county at 2.227 per $1,000 of assessed property value.
CARGO SHOW RETURNS: Air Cargo Americas is returning to Miami. The biannual show is scheduled for Oct. 26-28 at the Radisson Centre, 777 NW 72nd Ave. This year's theme is Air Cargo Security: Safeguarding or Jeopardizing Trade? Speakers will include Miguel Southwell, assistant director of business development for the Miami-Dade Aviation Department; David Brooks, president of American Airlines' cargo division; and John Mullen, CEO of DHL Americas. Robert Berrios, Air Cargo Americas sales director, said the show in 2003 generated $147 million in business. Details: (305) 871-7910 or info@worldtrade.org.
ASIAN TALKS: The Miami Free Zone in Doral will host the Asian Business Conference on Aug. 4 with talks about opportunities in China, Japan and Korea. Speakers are to include the consul general of China from Houston, Hu Yeshun, whose jurisdiction includes Florida; Miami-Dade County Commissioner Jose "Pepe" Diaz; Doral Mayor Juan Carlos Bermudez; Enterprise Florida Senior Vice President Manny Mencia; and Miami Free Zone President Ralph Gazitua. Admission is $20. The Miami Free Zone is at 2305 NW 107th Ave. Details (305) 569-2639 or (305) 591-4300.
FAR EAST TRIP: The Asian Business Conference will preview an October mission to the Far East set up by Enterprise Florida, the Florida-China Association, the Southeast US Japan Association and the Korean Business Council. The group is to land Oct. 16 in Tokyo, travel to Korea to participate Oct. 20 in the Seoul International Air Show and then visit Beijing. Organizers may take up to 70 delegates. The trip is to extend to Oct. 28. "China is the United States' fastest-growing market," said Dave Woodward, executive director of the Florida-China Association. "As China gears up to the 2008 Olympics and the World Expo in 2010, the country becomes one of the world's greatest consumers." Details: (305) 569-2639.
MONEY TRANSFERS: The Florida International Bankers Association will present a congress on money remittances at 8:30 a.m. July 25 at the Hotel InterContinental Miami downtown. "This meeting aims to bring together money-transfer companies with their counterparts in Latin America to talk about issues that confront both parties," said Jorge Guerrero, CEO of Optima Compliance and Consulting, one of the organizers. "One solution is to create a hemispheric-wide association to develop recommended practices." Details: (305) 579-0086. Admission is $300.
AIRPORT VENDORS: The Miami-Dade Aviation Department will host a July 28 workshop for small and disadvantaged businesses seeking to sell products or services to Miami International Airport. The free workshop will provide information regarding financing, insurance and bonding. Details: Lourdes Borrego, (305) 876-7753 or lborrego@miami-airport.com. Reservations are required.
CHILD'S PLAY: The PlayGround Theatre for Young Audiences is $5,000 richer, thanks to the Miami branch of Smith Barney. The gift is to be used for a community outreach program that is to provide free tickets to children and families. The company, founded last year by Stephanie Ansin and husband Oleg Kheyfets, has hosted more than 2,600 children from groups that include Amigos for Kids, Big Brothers Big Sisters of Greater Miami and Make-A-Wish Foundation of Southern Florida.
SCHOOL GRADES: The Florida Department of Education has awarded Miami-Dade County Public Schools a "B" for the school year, up from a "C" last year. The county's schools achieved the third-highest point rise statewide in 2004-05 based on FCAT scores, student learning gains and improvements among the bottom 25%.

International buyers are major players in the Florida residential real estate market, accounting for 15 percent of total home sales, according to a new joint study conducted for the Florida Association of Realtors (FAR) by the National Association of Realtors (NAR).

For a long time, anecdotal evidence from Realtors has suggested that international buyers play a sizable role in Florida home sales, but this study marks the first attempt to quantify the trend, according to FAR.

Of the 986 Realtors who participated in the 2005 Profile of International Home Buyers in Florida survey, 87 percent reported that they did at least one home sale transaction with international buyers in the previous 12 months (between May 2004 and May 2005). Two thirds -- 66 percent -- of those Realtors who brokered foreign-buyer purchases said that one to four of all their transactions were with international clients. Altogether, the Realtors surveyed closed 1,844 home sale transactions to non-U.S. buyers.

Highlights of the survey findings include:

* Most buyers chose South Florida, Central Florida or the Gulf Coast. Almost one third (30.4 percent) bought a home in Miami-Fort Lauderdale, followed by Orlando (22.7 percent), Naples-Fort Myers (13.7 percent), Tampa- St. Petersburg (9.9 percent), Sarasota (9.9 percent) and West Palm Beach (5.8 percent). Only 7.6 percent of foreign buyers bought homes elsewhere in the state.

* Florida's international homebuyers came from more than 100 countries in all areas of the world, but Europeans bought the majority of Florida homes -- 58 percent -- with more than half those European buyers from a single country, the United Kingdom.

* The United Kingdom alone accounted for one third of all international home purchases.

* One third of international buyers were from South America, Central America and the Caribbean.

* Over one third -- 36 percent -- of international buyers paid cash for their home compared to only 10 percent of all Florida homebuyers.

* For foreign buyers, an almost equal share purchased their Florida homes to use as a vacation home (38 percent) or as an investment (37 percent). Only 17 percent purchased a home to live in while traveling to the U.S. on business.

Non-U.S. residents purchased homes for many different reasons, according to the study: U.S. mortgage interest rates are low, many can get "more house for the money" here, the U.S. is seen as politically stable, airfares are generally affordable, and the "rise" of the Euro has spurred travel to the U.S. In addition, foreign baby-boomers -- like their American counterparts -- are looking for ways to maximize their return on investments.

For the survey, FAR defined a foreign homebuyer as someone who principally resides in another country (outside the U.S.), and is not classified as a foreign-born resident of the U.S. International buyers are not U.S. citizens (either naturalized or native-born and living outside the U.S.), a U.S. immigrant, or a foreign student or worker on a temporary visa.

Shaq's $32 Million Shack
Star basketballer Shaquille O'Neal's Florida estate just hit the market for $32 million, less than a year after he bought it.

Last summer, after a dramatic move from the Los Angeles Lakers to the Miami Heat, O'Neal bought the approximately 20,000-square-foot house on Miami's exclusive Star Island for around $19 million. Former Miami Heat center Rony Seikaly built the mansion in 1992, which meant that the dimensions fit the 7 foot 1, 325-pound center.

"Shaq bought it immediately because the doorways are very tall," says broker Kevin Tomlinson of Esslinger Wooten Maxwell Realtors. "It's the only house he could fit into."

Announcing his cross-country move last year, O'Neal jokingly asked for a 15% commission if anyone sold a photo of him walking unclothed on the beach. But it appears Shaq is less than fond of the attention his waterfront estate has been getting.

The guard-gated (and aptly named) Star Island lies in Biscayne Bay, between Miami Beach and the mainland. Other high-profile residents include music mogul Sean "P. Diddy" Combs and singer Gloria Estefan. Rumor has it that the sports star, who ranked fifth on Forbes' Celebrity 100 list this year, is sick of the tour boats that lurk in the waters around celebrity homes, hoping for a glimpse. O'Neal, whose $28 million-per-year paycheck is the highest in the NBA, is rumored to be browsing in the Ft. Lauderdale area.

The Star Island house has eight bedrooms and ten baths, and sits on a rare 2.5 acres of land. It features a tennis court, racquetball court, gym, 300 feet of dockage and a two-bedroom guesthouse. It is listed with Coldwell Banker, who said they could not discuss any details.

The price record for a Miami-Dade County residence is around $21 million, Tomlinson says. Even if O'Neal's property goes for far below the asking price, it could set a new standard. And, to add to the desirability, his is the only Star Island home currently on the market.

Turnberry Ocean Colony in Sunny Isles is getting set to tear down their sales center and model to make way for the much anticipated south tower. Sales for Turnberry Ocean Colony have been phenomenal with only a small percentage of units remaining in the South Tower. If you would like to see the only full scale model of a pre construction condo in Sunny Isles, you had better hurry before it is gone. Turnberry Ocean Colony North Tower should begin closings in December.

The Mortgage Bankers Association is projecting robust economic growth of 3.5 percent through 2007. Total residential mortgage production in 2005 will be $2.74 trillion, the third-biggest year behind 2003 and 2002.

"At about 3.5 percent, economic growth will be solid this year, despite a drag from sharply higher energy prices and a widening trade deficit. Housing will continue to be a major contributor to economic growth. We expect the string of record-high home sales to continue for the fifth consecutive year. The labor market will remain strong, even with an expected pickup in productivity in the second half of the year. Core inflation should edge higher this year but remain near the Fed's (Federal Reserve) target of 1.5 percent. The Fed is expected to continue its modest tightening through next year to ensure that inflation remains under control," said Doug Duncan, MBA chief economist and senior vice president, research and business development.

"Long-term rates will remain quite low, supporting residential and commercial real estate finance activity," he adds. "Long-term rates should gradually increase from current levels by 20 to 30 basis points by the end of 2005, and another 40 to 50 basis points during 2006, finally reaching about 6.25 percent for a 30-year, fixed-rate mortgage in 2007. Despite a moderate increase from a currently low rate environment, interest rates will still be quite low by historical standards."

Following are the key points of the latest MBA forecast:

Real GDP growth will average 3.5 percent in 2005 through 2007.

The unemployment rate will decline from the current level of about 5.0 percent to 4.9 percent by the beginning of 2007. The labor market is expected to add an average of about 180,000 jobs monthly.

Fixed mortgage rates will rise from today's 5.5 percent to an average of 5.7 percent in the fourth quarter of 2005, 6.2 percent during the fourth quarter of 2006, and 6.3 percent in 2007.

Existing-home sales will increase by 2 percent to a new record level in 2005, but pull back by about 3 percent in 2006 and decline another 2 percent in 2007. New-home sales will also rise by nearly 2 percent to a record high in 2005, and slip by 4 percent in 2006 and about another 3 percent in 2007.

Home price appreciation is expected to moderate this year, with median existing home prices increasing by 6.8 percent during 2005, and 5.5 percent for new homes, compared with 9.3 percent and 13.3 percent in 2004, respectively. Price gains in 2006 and 2007 are expected to slow further to a more sustainable pace of 4 to 5 percent.

Residential mortgage originations for purchase loans will increase to $1.62 trillion in 2005, edging up to $1.64 trillion in 2006 and $1.68 trillion in 2007. Residential refinance loans will decline to $1.12 trillion in 2005, $863 billion in 2006 and $791 billion in 2007.

Total residential mortgage production in 2005 will be $2.74 trillion, the third-highest level ever.

The 2005 multifamily market will be similar in volume to 2004's market. Brisk property sales and refinancing are the underlying themes. This will be the front of an elevation of refinance activity due to the maturing of a significant volume of loans made a decade ago.

Mortgage bankers appear to be on pace to exceed last year's record volume of commercial loan originations. Commercial mortgage activity should remain strong as rates remain low, yield-maintenance clauses expire and loans get refinanced, and the strengthening economy improves underlying commercial property economics.

Just as in residential mortgage markets, there are differences in local economic effects on real estate finance activity - the same principle applies to regional and local commercial property markets.

There are both upside and downside risks to this forecast. On the upside, a rebound of inventory investment could boost growth in the second half of the year by more than projected. On the downside, higher oil prices, higher core inflation or more aggressive tightening by the Fed could result in a slower economic growth than projected.

Florida�s population increased an average of 1,100 people per day during 2004 according to the U.S. Census Bureau estimates. The Sunshine State gained 397,980 people, increasing the total population to almost 17.4 million. If this pace is maintained, Florida is set to surpass New York before the year 2020 as the third most populous state in the nation after California and Texas. Some of the forces fueling the growth are the workers seeking jobs, retirees and a steady flow of people moving to Florida from other states as well as from out of the country due to the state�s thriving economy, improved job market as well as climate and natural environment. At the current population level, Florida has almost doubled the 1980 count of 9.7 million. Also, leading all other states, 14 Florida counties are among the 100 fastest growing counties in the nation. Flagler County ranked number one between July 2003 and July 2004. Other counties are St. Johns, Osceola, St. Lucie, Lake, Union, Pasco, Hernando, Clay, Santa Rosa, Walton, Lee, Wakulla, and Okeechobee. On another note, Naples was the most popular second home market in the country last March.

Jade Ocean, formerly known as Jade Beach II is getting set to release units. These preconstruction condos located in Sunny Isles, Florida are in great demand. Don�t worry if you missed out on the first offering because there will be a resale program that will launch in the near future. A four million dollar sales center is currently under construction that will soon be open for business. Jade Beach and Jade Ocean will both be ultra modern in style and architecture. Both buildings will have the latest in technology with touch screen capabilities in each unit.

Icon Brickell is the Related Group�s newest project in downtown Miami. Icon Brickell will be located on the old Sheraton Biscayne Bay site. The first condo tower has sold out and reservations are being taken for tower number two.
Icon Brickell has loft and condos to choose from. This is Miami�s hottest new pre construction condo project. As always, there is a big demand for the Related Group projects, so time is of the essence.

With construction set to start, 50 Biscayne resales will soon follow. The 50 Biscayne views will be some of the best of any condo project in downtown Miami. 50 Biscayne condos will be 54 stories tall and will also have retail restaurant, and a boutique hotel space. 50 Biscayne is within walking distance of the Miami Arena and Bayfront Park. Units range in size from 845 to 1789 square feet with different floor plans to choose from.

The Bath Club was formed in 1926 and is now home to one of Miami Beach�s most exclusive new residential communities. The Bath Club is very close to being finished and offers both condo and oceanfront villa living. The Bath Club Villas will be Miami Beach�s only true oceanfront homes. The Bath Club is located in the Millionaires Row section of Miami Beach.

The Bath Club Construction Progress as of May 25, 2005

The Plaza on Brickell has just announced it�s new resale program. One bedrooms will be starting in the $300�s two bedrooms will be starting in the $400�s. These starting prices obviously reflect the lower floors with prices becoming more expensive the higher up in the building. Sizes of these units range from 683 to 1400 square feet. The Plaza on Brickell floor plans offer several varieties to choose from. The Plaza on Brickell has already started construction and will be comprised of two high rise towers with retail and restaurant space.

The One Miami condo project is located at the mouth of the Miami River in downtown Miami. One Miami offers some of the best views of any condo in Miami-Dade County because of it�s great location. One Miami was the first new condo project in downtown Miami, and it�s success is partly responsible for the boom of construction in the area. The One Miami floor plans offer something for everyone.

Aqua Allison Island is one of Miami Beach's newest and most diverse new communities. Aqua Allison Island is an 8.5 acre community located at the southern tip of Allison Island in Miami Beach. The site plan is very unique offering Aqua mid-rise condo buildings as well as Aqua townhouse living. We offer a full listing of Aqua Allison Island properties to choose from. Aqua is comprised of 46 townhouses and 3 mid rise buildings.