In late December, several analysts announced that the recession is here. I'm not sure to whom this proclamation would have come as a surprise, never the less there are still those out there who "believe but can't accept" that the party may be over.

Retail sales growth, as reported by ICSC, indeed slowed during the 2007 holiday period but sales still exceeded last year's record level. U.S. unemployment has risen, but the rate of unemployment still remains below full-employment bench markers and new jobs continue to be created. Credit markets have tightened but the supply of worldwide capital continues to outstrip the availability of assets. What we see is not so much a paradox but a transition. Wealth volatility and general uncertainty have taken a toll on consumer spending while asset re-pricing has distracted capital markets. Few economists are predicting a global meltdown but the majority is now in the slowdown camp. No one, however, has a clear read on when it will bottom out, let alone end.

2007 Review
As the final reports were compiled, ICSC showed that 2007 revenues rose to $75.3 million against expenses of $70.6 million. As compared to 2006, revenues will be up by almost 14% -- expenses by 15%. The increase in revenues enabled ICSC to undertake several important new initiatives, not all of which will generate a corresponding revenue stream.

New initiatives included the launch of the Master Developer Series professional training, publication of a hard-copy anniversary-edition annual report, creation of ICSC's Green Pavilion and Sustainable Development initiatives, the ICSC Research Scholar Program, special 2007 public relations campaigns, doubling the size of the RECon Leasing Mall, employee training, opening a much-needed office in China, and major enhancements to the shopping center security training program.

A bellwether of ICSC's value is membership growth. In industry-wide downturns, such as we saw in 1990-93 and again in 1999-2003, membership flattened out or declined. While we have witnessed unprecedented membership growth since 2003, up 80% from 40,000 to over 70,000, our focus is to remain such a critical business and professional ICSC Worldwide Membership resource for the industry that December 31, 2007 ICSC is the very last expense cut in a downturn. This is being accomplished by offering a combination of highest-quality services provided at the lowest cost to our members. For the sixth year in a row ICSC held the line on any fee increases. Dues have not been increased in eight years. Economies of scale and efficiencies put in place over the last several years are expected to result in a modest budget surplus once again next year.

Strategic Objectives
Four areas were identified as being priorities for ICSC to meet the industry's needs in 2007 and beyond: research, education, business services and human capital. Each of these is intended to provide key business development and advocacy services to our members, to add to membership value, and to represent financially responsible allocation of resources. In each of these four areas there were a number of important accomplishments, several of which I have noted below.

Research... Expanded the menu and scope of research offerings to provide industry- wide insights by leveraging the collaborative, benefits of being an association. Increased the thought leadership of the association by linking research to legislative advocacy functions. Rationalized the roles and relationships between ICSC's research department and the ICSC Foundation. Highlights include:

• ICSC's first Research Conference in Latin America
• ICSC's Researcher publication in Spanish and Portuguese
• CenterView global database project
• New e-Library and electronic databases for members
• Joint ICSC/ULI SCORE/Dollars & Cents of Shopping Centers publication
• ICSC's first Research Scholar, Jerry Yudelson, on sustainable development
• Industry surveys on energy consumption of shopping centers in Europe to be used in lobbying efforts and benchmarking.

Education... Recognized and addressed the growing needs of our industry in complementary areas, such as design, mixed use, and retailing. Developed professional training programs tailored to needs of future retail real estate leadership, and awarded a new professional designation, the CDP, for Design, Development, and Construction professionals. Redesigned education offerings to complement local customs, language and needs. Evolved seamless process linking together ICSC training programs with professional certifications.

• New retailing courses at University of Shopping Centers and Executive Learning Series
• New School of Mixed-Use at University of Shopping Centers
• New Level I schools with design, development and construction focus
• First CPD exam given, in December 2007 to 130 professionals
• Master Developer Series launched, in New Orleans and Toronto
• Professional development curriculum and courses offered in Russian and Turkish
• Cultural orientation program for ICSC faculty teaching in overseas markets

Business Services... Evaluated ICSC's 200+ events offered worldwide into a more coherent business strategy. Added and removed programs as necessary.

• Combined ICSC Fall Conference with Specialty Leasing Conference
• Consolidated three mid-west regional idea exchanges into a Heartland Conference
• Created new ICSC advisory committees in Brazil, Spanish-speaking South America, Mexico/Central America, and Europe
• New specialty programs in Latin America, Africa and Asia
• Organized national committee events in Europe

Human Capital... Leveraging ICSC's educational programs, NextGen initiatives, university relationships, and employment opportunities resources, ICSC is becoming the primary source for developing new talent within the shopping center industry and providing access to careers. While technically a company-member trade association, for many individuals ICSC is their primary professional association.

• Hosted 300th NextGen event
• New NextGen programs in Mexico City, Bogota, Singapore and Warsaw
• Broadened university Host School relationships, offering faculty and student awards
• New Student-Member newsletter
• Internship listing for both students and employers
• Launched an ICSC internship program, hosting two summer interns at ICSC offices in New York
• Student membership expanded to over 1,000
• Guest lecturer series for students in New York area

The Year Ahead
As we head into the new year and new environment, ICSC is well positioned. We have built an efficient operating structure and solid reserves to continue to provide our members and our industry the resources they need to grow and prosper. In spite of an expected slowdown in ICSC's growth, we will be able to expand our business and services, while continuing to address the real needs to our members. ICSC will be offering more local programs, broadening its training services, collaborating more closely with colleges and universities, enhancing its research and shoring up the industry's business-critical deal-making events.

The proposed 2008 budget anticipates very modest growth in membership and meeting attendance, both of which had been growing at double-digit rates. While expenses incurred by ICSC have risen each year, the general economic slowdown may take some pressure off of rapidly rising food, beverage, and meeting-space expenditures, ICSC's biggest expense.

Key strategic objectives for the year include a continued emphasis on environmental sustainability and business deal-making for ICSC members. A new Environmental Committee was launched January 17th, 2008 in New York. ICSC members participated in an all-day session and work groups to define a mission statement and to lay out specific agendas for legislation, best practices, information sharing, research, education and publication. In addition to a solid developer showing, the committee meeting included many retailers, representing our industry's first concerted effort to combine the initiatives of the retailing community with the developers.

Deal-making is a second key strategic emphasis. In 2007 ICSC doubled the size of the RECon Leasing Mall/Tradeshow space in Las Vegas, added the New York Sheraton convention space to the Hilton for the New York Conference, and relocated both the Southeast Conference and the Western Division Conference to significantly larger, major convention centers. In every case the additional space was gobbled up and waiting lists trimmed or eliminated. With some tempering of expansion plans amongst U.S. retailers expected this year, ICSC is not planning new increases to deal-making space within the U.S.

Outside of the U.S., where retail and development expansion continue, ICSC has lagged the industry in providing its members efficient and productive deal-making venues. ICSC's first deal-making-only event in Europe, Retail Connections, to be held in London on January 29, 2008, is a prototype for a larger program in 2009 and beyond. Similarly, ICSC's Asia Expo, now in its third year, is being moved from Singapore's convention center to the much more dynamic and active market of Macao. In South America, ICSC has partnered with the Brazilian Council of Shopping Centers (ABRASCE), to host a major South American event in Sao Paulo, Brazil, September 8 - 10, 2008. This Conference of the Americas will launch an annual program moving across major Latin American markets in future years.

Finally, ICSC is making a concerted effort to supplement the strength of the May Las Vegas events by transforming the perception of a Springtime Convention into RECon, the major global event for retail real estate deal-making and networking.

Five-Year Plan
ICSC's five-year plan is based on an assumption that the global growth in our industry slows from its torrid pace of the last five years, but that penetration of ICSC goes significantly deeper. That penetration will be across geographical areas and within business sectors. Within the U.S., as its economy slows and government revenue collections contract, particularly at the local level, cities, counties and states are stepping up their efforts to create jobs and enhance sagging tax bases with new retail projects in urban, rural and suburban markets. Mayors, planners, economic development commissioners and the like are turning to ICSC for guidance, research, training and contacts, the bulwark of this association. Outside of the U.S., there are booming shopping center markets where participants are calling out for training, research and opportunities to bring retailers and developers together. In China, ICSC has fielded pleas from government officials at local and national levels to assist them in organizing a framework for developing codes, guidelines and market analysis. In Europe, ICSC has become the de facto pan-European entity to monitor EU legislation and speak out on behalf of a still insular industry. In the Middle East much of the top shopping center talent is being called back to India's booming industry, leaving a potentially crippling void of trained personnel. The African continent, with but a handful of modern centers outside of its northern corners and southern tip, is experiencing a growing consumer base in its democratizing sectors, with virtually no shopping center knowledge or experience but with unbridled enthusiasm. Latin America too has reawakened to its burgeoning middle class and is responding with a new generation of retailing formats and centers. All of these global challenges are seen as opportunities for ICSC to continue to serve our industry in an increasingly meaningful way.

The allocation of resources across ICSC activities is planned to remain relatively constant over the next five years, with somewhat greater emphasis is being directed to ICSC's education programs. This reflects two factors. First, there is a need for broadening of the scope of training options at the senior and introductory levels. The second factor is the linking of ICSC's education programs to professional certification. This is expected to boost both the number of individuals taking ICSC courses and those seeking industry professional designations.

The historical government relations functions of ICSC, essentially monitoring U.S. Federal and some local legislation, is being beefed up to include significantly more resources devoted to state and local initiatives, and adding a small international capability, serving our Canadian membership and European members principally on matters of environmental sustainability. In addition, ICSC has added new in-house skills for managing legislative issues while cutting back on consultants. This has actually allowed ICSC to do more with the same resources.

The tone of the next five years is one of focusing on what we do well for our members in helping them to succeed. I welcome you comments and input. While there is some economic uncertainty about the days and years ahead, we remain confident in the viability and creativity of the shopping center industry to not only adapt, but to prosper.

In Closing
ICSC sees itself as a partner in the success of the global retail real estate community. I am very privileged to be a part of this great and even noble effort and am honored to play a role alongside the leadership of this board and its elected officers. I offer my deepest gratitude to our members for your support of the industry, of ICSC, and of our efforts.