RE Firms Face Cost-Cutting Challenges

Real estate companies will need to carry out aggressive cost-containment programs over the next 12 months as a result of regulatory changes and other factors, according to a report from Deloitte & Touche, a New York-based professional services firm.Dennis Yeskey, national managing director of the firm's real estate capital markets practice, said real estate companies are "caught in a classic squeeze" that requires lower operating expenses and stronger tenant relationships. "We see some tough challenges for 2003 and beyond," Mr. Yeskey said. "For one thing, most real estate companies have yet to put in place the organizational structures and processes needed to comply with new regulations for corporate governance and financial reporting, including new rules for consolidating real estate partnerships and recording the sale of a building." The annual report, titled "Real Estate Capital Markets: Top Ten Issues," also advises investors to consider how long real estate prices will stay high while "the underlying economics of buildings deteriorate." The company can be found online at http://www.deloitte.com.us.