Jones Lang LaSalle

FINANCE USA 01 19 06
CAPITAL FLOWS

Peter Slatin

Against a backdrop of stunning totals for building sales in the U.S. in 2005, the merger of brokerage powerhouses Eastdil and Secured Capital, announced last November, closed Wednesday. Although no price for the acquisition by Eastdil of Secured has been announced, published reports estimated the deal value at anywhere between $100 million and $150 million.

To see a full breakdown from Real Capital Analytics of year-over-year buying by property type from 2002 through 2005, click here.

According to Eastdil chairman, Ben Lambert, the two companies were involved in debt and equity transactions totaling $60 billion in 2005. Roy March, who has headed Eastdil's West Coast office, will serve as CEO, while Mike Van Konsvnenburg of Secured Capital will be its president.

The $621 million sale of the Manhattan House apartments was just a tiny piece of the $60 billion in deals done by Eastdil and Secured Capital in 2005.

Considering that real estate investors spent a total of $276 billion in property acquisitions last year, the merged company will have a healthy market share to kick things off. "We end up with significant capability," said Lambert, speaking to The Slatin Report from New Orleans, where, as part of a Hilton Hotels Corp. board meeting, he had just toured the devastated city. Still, he insists, "we will have to compete for everything. We're only as good as tomorrow, and the key is whether this will be good for our clients."

The expanded company joins Eastdil's equity-heavy expertise and East Coast bias with Secured's acknowledged leadership on the West Coast, where it also has a dominant position in debt-related transactions. Providing the entity additional is Eastdil's parent, Wells Fargo, as well as Eastdil's eight-year-old ownership stake in Green Street Advisors, a leading buy-side analyst in the REIT industry.

One new area for Eastdil: the company will now participate in Secured's existing business in institutional fund raising. Secured is already out in the marketplace chasing dollars for Cargill and ProLogis. "We want to build that business," declares Lambert.

Competitors (who declined to comment) will no doubt be watching to see whether the merger creates internal friction, a possibility when any two service organizations built on the sometimes outsize egos of power brokers. Any resulting personnel fallout could result in juicy pickings for leaner operations.

THE NUMBERS

Eastdil and its rivals should have plenty to work on in the new year. Dan Fasulo, director of research for New York-based Real Capital Analytics, says that spending on real estate acquisitions jumped from $195.6 billion in 2004 to $278.8 billion last year, an increase of 42.4% in done deals. And that's on top of a 55.3% jump over the $119.4 billion spent in 2003. to $195.6 billion from 2003 to 2004, to a whopping 63% boost.

This year is off to a roaring start, says Fasulo: $35 billion in deals are already under contract, with the year less than three weeks old.

Cap rates have compressed nearly 16% over the same two-year period, from an average of 8.2% in 2003 to 6.9% last year.

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> SPACE NYC 01 19 06
EOP RINGS IT UP
Peter Slatin

Equity Office Properties has had its troubles lately. The giant office REIT has not traveled the smoothest of roads in getting settled in Manhattan; it has been selling "non-core" properties like mad to cover a too-large dividend; and was finally forced to slash its dividend in December.

But its luck may be about to change. After coming under sharp criticism (mostly from envious runners-up) over its $505 million purchase of the Verizon Building at 1095 Sixth Avenue last year, EOP may be the first kid on the block – any block – to take advantage of a Manhattan office market bursting at the seams. Vornado president Michael Fascitelli predicted at an industry luncheon on Jan. 12 that " a spike in Manhattan rents" is in the cards, possibly this year though certainly within the next few years.

Cushman & Wakefield market stats put the Midtown vacancy rate at 7.8% at the end of 2005, with as few as five blocks of space of 250,000 square feet or larger. And financial services companies continue to grow.

EOP plans a $250 million-plus reskin and overhaul of the Verizon Building, yielding them a $750 million spec project as the market heats up.

Now EOP has unveiled extensive renovation plans for 1095 Sixth, budgeted at up to $260 million. The plans, designed by architects Moed de Armas & Shannon with Gensler, include a complete recladding of the 1 million-square-foot structure, possibly the largest such project ever in Midtown. The contractor for the project is Tishman Construction, which is also building the huge One Bryant Park for the Durst Organization directly across 42nd Street.

Indeed, market sources say that one possible anchor for the Verizon Building is Bank of America, which is taking 800,000 square feet at the Durst project but is in the market for more space and may want to straddle 42nd Street to create a campus. "Bank of America is in the market, and we're talking to everyone that is in the market," acknowledges EOP's Don Huffner, who runs the Northeast and Atlanta markets for the company.

The Verizon Building today.

Jones Lang LaSalle


Burlington Coat Factory
GlobeSt.com UPDATE: Burlington Going For $2B
By Ian Ritter
Last updated: January 19, 2006 08:07am

(Ian Ritter is national online editor for GlobeSt.com/RETAIL.)
BURLINGTON, NJ-Private-equity firm Bain Capital Partners is buying the 367-store chain Burlington Coat Factory for about $2.06 billion, or $45.50 per share. The deal comes after Burlington executives said in June they were “exploring possible strategic alternatives for the company to enhance shareholder value.”

This is the second multibillion-dollar retail deal for Bain in the last month. In December, the firm and a group of investors agreed to acquire the Dunkin’ Donuts chain for about $2.4 billion. Last March, Bain, as well as Kohlberg, Kravis, Roberts & Co. and Vornado Realty Trust, bought the Toys “R” Us chain for $6.6 billion.

Bain is not the only private-equity firm investing in the retail industry as of late. Last month Sun Capital Partners bought discounter ShopKo Stores for close to $880 million. Also in December, a joint venture between Prentice Capital Management LP and GMM Capital LLC took Goody’s Family Clothing private for about $290 million.

Don’t expect to see private equity firms stop purchasing retailers any time soon, for better or for worse, says Howard Davidowitz, chairman of New York City-based Davidowitz & Associates, a consulting and investment banking firm. “We’re going to be seeing this as long as these venture-capital firms have unlimited money and are under pressure to spend it.”

Bain executives, who say that they plan to run the company similarly to how it has been doing business, have their work cut out for them, Davidowitz says. The chain faces tough competition from discounters like the TJX Cos. and Ross Stores and retailers will be facing a tough consumer environment due to high personal debt and energy prices, he says.

Nonetheless, Burlington turned in a strong performance during its most recent reported financial quarter, which ended Nov. 26. Year-over-year same-store sales were up 10.4% during the quarter, on sakes if $945.5 million. Income was up 4.5%, to $45.4 million.

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Work Starts for 680,000-SF Spec W/D Facility
By Eric Peterson
Last updated: January 19, 2006 08:31am

(To read more on the industrial market, click here.)
CRANBURY, NJ-Site work is just under way on a 55-acre parcel that will host a new 680,000-sf warehousing/distribution facility in the NJ Turnpike Exit 8A market. The parcel is part of the former 115-acre campus that Dwight & Church inherited when it acquired Carter Wallace’s consumer products division in 2001. The spec project is being done as a joint venture by Rockefeller Group Development Corp. and IDI, and is expected to be delivered by the end of 2006, according to Clark Machemer, RGDC’s director of real estate development.

The start of work culminates a five-year process and a series of complicated transactions beginning in 2000 when Stan Danzig and Jules Nissim of Cushman & Wakefield of NJ, East Rutherford, picked up the assignment to dispose of Church & Dwight’s surplus real estate. Built for Carter Wallace in 1960, the 115-acre site had four buildings totaling 750,000 sf and a pad site for another 140,000 sf.

In 2002, RGDC and IDI won a bid process with a master plan calling for the existing buildings to be demolished and replaced by two million sf of W/D space, according to Danzig. Contamination of a portion of the site delayed the development process until the site was subdivided into four parts, as proposed by C&W, and a second site plan was approved by local officials. And last fall, in a transaction brokered by C&W, the JG Petrucci Co. of Asbury bought an existing on-site warehouse and the pad site.

“The solution balanced the economic interests of both Church & Dwight, which derived revenues from the combined parcels to justify the sale and saved relocation costs, and RGDC, which achieved enough critical mass from the acquisition to make the project feasible,” Machemer says. The start of work on the new spec warehouse, which has foreign-trade zone status and Turnpike visibility, “ushers in a new chapter for the 8A submarket from new development to redevelopment,” Danzig adds. “Many people still think of 8A as a land of opportunity for ground-up development. But very little raw land is left that is not already developed or controlled.

“This campus was a major force in the pharmaceutical and consumer products industry,” he says. “It was also one of the first major industrial developments in the 8A market. But while it remained a prime site, it had become an eyesore.”

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Restaurant Chain Expands HQ Location
By Eric Peterson
Last updated: January 18, 2006 12:58pm

MOUNTAINSIDE, NJ-Charlie Brown’s Steakhouse Corp. has renewed its existing HQ space and added 4,500 sf in a separate sublease transaction, bringing its total occupancy to 10,113 sf at 1450 Route 22 here. The two-part signing is about half of recent lease transactions arranged by Colliers Houston & Co., totaling nearly 21,000 sf, at the Punia Co.-owned building.

Colliers Houston SVP Stan Kurzweil represented Charlie Brown’s in the renewal and sublease/expansion, the fifth office deal he’s done for that company in recent years. The sublessor, Communications Network Enhancement, was represented by William McCaffrey, EVP at Trammell Crow. Jeffrey Punia acted for the Livingston-based Punia Co. in the direct renewal. Terms were not disclosed.

Founded in 1966, Charlie Brown’s is the largest steakhouse operator in the Garden State. Besides its 40 eateries in New Jersey, the company operates another 17 in New York and Pennsylvania.

In the other transaction at 1450 Route 22, Children’s Specialized Hospital has subleased just over 10,800 sf of office space. According to Kurzweil, who similarly represented the tenant, the pediatric hospital is expanding its administrative departments. Currently operating its main facility nearby, Children’s Specialized Hospital is also building a new facility on the campus of Robert Wood Johnson University Hospital in New Brunswick. For sublessor Communications Network Enhancement, the subleases are related to that company’s shedding of its HQ space relating to its recent acquisition.

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Furnishings Maker Leases 35,000 SF for Distribution
By Eric Peterson
Last updated: January 18, 2006 12:51pm

(To read more on the industrial market, click here.)
SECAUCUS, NJ-International Express Manufacturing has signed a full-building lease for the 34,797-sf 530 Secaucus Rd. here. The tenant, based in nearby East Rutherford, will utilize the facility for the warehousing and distribution of home furnishings products.

IEM was represented by Matthew Corpuel, vice president in the Saddle Brook office of CB Richard Ellis. The owner of the asset, the locally based Hartz Mountain Industries, was represented in-house. Terms of the signing were not disclosed; however, the space was offered on Hartz’s website for a five-year term at a rate available “upon request.”

Besides the W/D function, IEM will also utilize a portion of the building as a retail outlet store. The building’s floor plan includes a 3,000-sf retail space and just under 6,000 sf of built-out office space.

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N.J.'s growth not enough, experts say
Thursday, January 19, 2006
BY DAVID SCHWABStar-Ledger Staff

The final tally is complete and New Jersey employers added 37,200 jobs to their payrolls in 2005, a subpar year.

One hundred forty-five of these workers can be found at the Palace at Somerset Park, a conference center and banquet facility.

It's an impressive place. It features a grand entrance with columns resembling the White House set on a 30-acre campus in Somerset, surrounded by potentially lucrative clients such as the state's big pharmaceutical companies.

Inside are chandeliers, working fireplaces and enough space to house 1,200 people for a business meeting. Though opened just last May, the venture already plans to expand.

"We have not reached our peak. So we are definitely hiring more people," said Kathleen Carney, the director of human resources. This year, payrolls could swell to about 200, including 55 full-time and the rest part-timers.

To some extent, the success of the Palace underscores the uneven performance of the New Jersey economy, one recorded in yesterday's year-end report card. The state's economy continues to grow -- with a few bright spots -- but not quite fast enough and not necessarily in all the right places, experts said.

The New Jersey Department of Labor and Workforce Development yesterday reported more of the same for December, with payrolls rising by about 3,000 jobs, while the state's unemployment rate rose to 4.7 percent, from 4.6 percent in November.

For all of 2005, job growth in New Jersey moderated, producing fewer jobs than the 47,000 added during 2004. In its glory days, New Jersey added more than 70,000 jobs per year, many of them in glitzy office buildings. About 4 million people are employed in New Jersey.

New Jersey also continues to perform worse than the nation in job creation. Payrolls grew last year by 1.5 percent in the U.S., even with the damaged caused by Hurricane Katrina, compared with less than a 1 percent rise in New Jersey.

While the national unemployment rate has been falling, hitting 4.9 percent last month, the New Jersey unemployment rate has been rising for most of the last six months.

"New Jersey lagged quite significantly behind the national growth rate," said Joseph Seneca, an economics professor at Rutgers University and one of the state's leading forecasters. "The yellow caution light is out."

Beyond the basic numbers, the problem in New Jersey is too many of the added jobs are lower-paying service jobs, such as those at restaurants and hotels, rather than higher-paying jobs at technology and finance companies, the sort of positions that have previously fueled the state's growth, according to some experts and industry representatives.

"The New Jersey economy has a history of creating a lot of high-end, professional jobs. But what we see is the economy is rapidly changing," said Dennis Bone, president of Verizon New Jersey, who served on Gov. Jon Corzine's economic- development transition team. "The economy really is at a crossroads, and I think if we do not address some of these changes going on ... in two or three years, it is going to be tough times."

Verizon is one company bucking the trend.
It has begun moving the first of 3,000 employees, many highly paid, into a renovated headquarters in Basking Ridge. It will eventually house 1,700 Verizon workers from New York and 20 other states.
Verizon has also hired about 300 technicians to build its fiber-optic network and 300 customer-service representatives.
Moreover, job growth has not been spread throughout the state.
For example, employment in Burlington, Camden and Gloucester grew 2.8 percent for the first nine months of last year, while payrolls in Mercer County rose 1.7 percent, according to the most recent data. At the same time, payrolls increased 1.2 percent in Middlesex, Monmouth, Ocean and Somerset counties.
In addition, the labor department's report analyzing regional employment trends contains few examples of the type of job growth economists want to see.
There are some examples, such as NRG Energy, which moved its headquarters to West Windsor from Minneapolis a year ago, creating about 300 jobs. The energy wholesaler sells power to companies such as Con Ed in New York and wanted to be closer to its customers in the Northeast.
But more typical of the firms adding jobs in New Jersey last year, according to the report, were:
The Palace at Somerset Park.
Lowe's in Eatontown, with about 150 jobs.
Ruby Tuesday restaurant in Neptune, with 100 jobs.
Whole Foods Market in Middletown, with 200 jobs.
Hotels and restaurants alone accounted for more than 11,000 of the added jobs last year.
The downside is that the average pay for this type of service jobs ranges from $20,000 to $28,000, compared with $58,000 for professional and business services and $75,000 for finance, two categories that have boosted the state's economy in years past.
David Crane, director of labor- market and demographic research for the labor department, said one reason northern New Jersey has lagged southern New Jersey is its dependence on the financial-services industry. Also, there is more land in the less congested southern counties, he said.
Still, as the books closed on the year 2005, there were some encouraging signs.
Private industry created all but 1,800 of the added jobs last year. In 2004, by contrast, private industry created about 31,000 jobs while government accounted for about 15,000 jobs.
David Schwab may be reached at dschwab@starledger.com or (973) 392-5835.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.

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N.J.'s job gains didn't keep up with nation's

Employers struggled as costs rose
Posted by the Asbury Park Press on 01/19/06
BY MICHAEL L. DIAMOND BUSINESS WRITER

New Jersey gained 37,200 jobs last year, the state Department of Labor and Workforce Development said Wednesday in a report that showed the state's labor market didn't keep pace with the rest of the country.

Experts and employers said the final job figures are a sign that companies struggled with rising health care costs, higher energy expenses and interest rates, and the other costs of doing business in New Jersey.

Companies "are spending money. However, they're taking a lot closer look at the value that they expect to get for the money they put out," said Richard Dominguez, 63, who owns WSI Internet Consulting & Education in Ocean Township. He said he hopes his company's revenue will grow enough to allow him to add his first employee later this year.

The year-end jobs report showed New Jersey's labor market grew by 0.9 percent in 2005, while the U.S. labor market grew by 1.5 percent. The state's job growth also was down from 46,300 jobs in 2004.

The labor report for December, also released Wednesday, showed New Jersey added 2,600 jobs in the last month of the year. The state's unemployment rate rose to 4.7 percent from 4.6 percent in November. By comparison, the United States added 108,000 jobs in December, and its unemployment rate fell to 4.9 percent from 5 percent in Novem-ber. Because New Jersey represents about 3 percent of the U.S. labor market, it should have added 3,240 jobs.

The number of jobs is taken from a survey of employers' payrolls; the unemployment rate is taken from a survey of residents.

And the two don't necessarily move in the same direction. Economists give more credence to the payroll survey, which has a wider reach.

The report came one day after Gov. Corzine warned in his inaugural address that the state is losing high-paying jobs and replacing them with lower-paying jobs. If the trend continues, it means the state will collect less tax revenue.

"This indicates high-end corporate America is directing its hiring and expansion principally outside of New Jersey," said James W. Hughes, an economist and dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. He noted last year's job growth was less than half the number of jobs typically created during economic expansions.
One positive note: The private sector added 35,400 jobs last year, up from 31,300 in 2004, Hughes said.

Business groups chalked up the sluggish growth to the uncertainty employers face when trying to get a handle on their expenses.

Last year, for example, the cost of energy soared. The cost of health insurance rose by a double-digit percentage. And the cost of operating a business in New Jersey remains among the highest in the nation, said Philip Kirschner, president of the New Jersey Business and Industry Association, the state's largest business lobby group.

"It seems like consumer demand goes up and goes down," Kirschner said. "It does not track up and up each month, which would give employers confidence they can hire workers and have the work to sustain them."

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Corzine to seek business

Plans to name czar for economic development
BY STACIE BABULA BLOOMBERG NEWS

Gov. Jon Corzine, speaking to a group of mayors in his first full day on the job, said he will appoint an economic development czar to help attract and expand business in the state.
The appointee will report directly to Corzine, who took the oath of office Tuesday. The new governor said he has some people in mind for the job, though he didn't say when he would announce his choice.

''We have got to turn around the growth of business in the state," said Corzine, former chief executive of Goldman, Sachs & Co. The Democrat pledged during his campaign to use his Wall Street experience to expand the state's economy.

Other states are wooing companies looking to open or relocate business, Corzine said. Attracting them will help New Jersey create jobs and increase the tax base, he said.

New Jersey was once the leader in telecommunications, and it still has more jobs in drugmaking than anyplace else in the world.

AT&T and Merck & Co. are among the large employers in New Jersey that have shed thousands of workers during the years because of mergers and business reversals.

Corzine, 59, said during his campaign that economic growth is the only way to generate the billions of dollars needed to end chronic budget deficits, rebuild decaying highways and reduce the highest property taxes in the nation.

Corzine said he supports the mayors' call to overhaul the state's system of property taxation, which has driven residents out of the state and hurt small businesses.

''To put it simply, we are growing too few jobs, losing high-paying, value-added jobs and replacing them with lower-paying service work," Corzine said Tuesday in his inaugural address. ''To meet this challenge we will embrace pro-growth and pro-business initiatives."

Corzine credited his predecessor, Richard Codey, with working to keep Verizon Communications in the state.

Last year, Verizon considered locating its operations center in New York and Virginia before deciding on the Basking Ridge section of Bernards, a decision that state officials said retained 2,000 jobs and added another 1,750. Verizon decided on New Jersey after the state's economic development authority approved a $63.8 million grant for Verizon and exempted the company from a sales and use tax for the cost of its expansion and retention of employees.

Corzine, in his inaugural address, said the state has done too little to fight for the jobs in sectors including biotechnology, energy and finance. He also scolded lawmakers for ignoring or neglecting issues such as the state's child welfare system and the funding of schools and employee pensions, and said ''that neglect is sometimes rooted in private or political gain, at the expense of public interest."

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N.J. unemployment rate climbs in Dec.

TRENTON (AP) -- New Jersey's unemployment rate in December was 4.7 percent, up from 4.6 percent in November, the state Department of Labor and Workforce Development reported Wednesday.

The December unemployment rate also rose from the same period in 2004, when it was 4.2 percent, although it was lower than the nationwideunemployment rate of 4.9 percent for December 2005.

The Garden State registered 3,000 new nonfarm jobs in December from November, the vast majority in the private sector.

The education and health-services sectors added 1,700 jobs in December. In the construction industry, 1,400 jobs were created, while the financial sector, bolstered by increases in the finance and insurance areas, grew by 600 jobs.

The state was hurt by losses in the manufacturing sector, which lost 1,400 jobs, as well as the professional and business sectors, which lost 1,300 jobs.

The New Jersey Business and Industry Association, which represents private sector employers, said that in comparison with other states, New Jersey's job growth has been weak and inconsistent during the past two years and is evidence of a "sluggish economic recovery."

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Builders willing to speculate in NJ: Respond to demand for high-end offices along Princeton's Route 1, elsewhere
By Tina Traster
Published on January 16, 2006

Pent-up demand for Class A office space and state-of-the-art industrial facilities in suburban New Jersey has stimulated a mini-boom of speculative development that has not been seen in the state for at least five years. Developers say dried-up inventory for premier space in top markets, healthier corporate balance sheets, and new standards for productivity and efficiency justify building without guarantees from tenants. But developers, sobered by rising construction costs and tougher financing options, are building cautiously.

Great expectations

A case in point is the Gale Co., which is now constructing a five-floor, 175,000-square-foot Class A office building in a Parsippany office park, where it completed two office buildings in 2001. The new building, 100 Kimball Drive, is due on the market in October 2006 and "has strong interest but no signed deals," says Mark Yeager, president of the Florham Park-based company.
Mr. Yeager expects the building, with an average asking rent of $34 per square foot, to be 100% leased by mid-2007. However, the company will gauge the success of the building before it begins spec development on the fourth and final building in the 110-acre business park.
Even though office vacancy rates are 19% statewide, speculative developers are counting on vacancy rates of under 10% for new Class A buildings in desirable markets such as Princeton's Route 1 corridor, Morris/Essex counties along the Route 24 corridor, and even in Parsippany, where vacancy rates are closer to the state average. Developers do not see similar opportunities along the waterfront, in the Route 78 corridor or even in Bergen County.

What's needed

The developers say there is demand from Fortune 100 companies in a variety of fields that want modern, fiber-wired, open-floor plans and secure headquarters with amenities such as cafeterias and health clubs. They want buildings located in markets with access to mass transit, highways and skilled workers.

"It's the `flight to quality' syndrome for major companies," says Geoffrey Schubert, senior vice president at CB Richard Ellis in Saddle Brook. "Nearly a third of the 30 million square feet of office space available is in 20- or 30-year-old buildings that have been on the market for 24 to 30 months. This is a prime time to build Class A space."

In Princeton, four spec buildings totaling 800,000 square feet are under way. These include Reckson Associates' University Square, a five-story 315,000-square-foot building on Route 1, and the Patrinely Group's just-completed 1100 Campus Road, a five-story 167,000-square-foot office tower, in Princeton's Forrestal Center on Route 1.

"I'm not expecting miracles, but a slowdown in absorption rates and a healthier economy suggest the downturn is behind us," says Tom Bermingham, senior vice president of the Patrinely Group, a Houston-based developer.

Not every developer, however, is ready to put the shovel in the dirt.

"The good news is that there's not a lot of quality space, but we believe that corporate America is still hesitant. So we're waiting until the market takes a stronger turn," says Peter Eppie, executive vice president at SJP Properties in Parsippany, which has approval to develop 2.4 million square feet of Class A office space in Morris County.

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Burlington Coat Factory Sold for $2.06 Billion

Burlington Coat Factory (NYSE: BCF) has agreed to be acquired by Boston-based private investment firm Bain Capital Partners for $45.50 per share in cash for all outstanding shares. The deal is valued at $2.06 billion. Burlington Coat Factory, with its chain of 367 stores, sells apparel, shoes and home furnishings.

Facing competition from discount retailers like Wal-Mart, the Burlington-based company chose to put itself up for sale last year. It hired Goldman Sachs as its financial advisor last June to explore strategic alternatives.

Burlington Coat Factory has been under the helm of CEO Monroe Milstein, 77, since he founded it in 1972. Shares of the company lost $0.36 to $44.22 in afternoon trading. - Joao-Pierre Ruth

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January 18, 2006
Developers Can't Imagine a World Without Eminent Domain
By TERRY PRISTIN

Bank of America agreed to join the developer Douglas Durst in 2003 in building a 54-story tower in the heart of Midtown Manhattan, giving a psychological and economic lift to a city that was still reeling from the destruction of the World Trade Center.

Mr. Durst said he would not have been able to negotiate with Bank of America or other prospective tenants had the state not authorized him to use eminent domain, a redevelopment tool that is coming under fire in the wake of a United States Supreme Court ruling last June in a Connecticut case.

Now under construction at 42nd Street and the Avenue of Americas, the Bank of America Tower at One Bryant Park, as the project is known, was decades in the making as the Durst family assembled the site. Ultimately, only two buildings remained, but their owners kept raising the price, Mr. Durst said.

Eventually, the state told Mr. Durst that if he found an anchor tenant the buildings could be condemned even though the site was not in a blighted neighborhood. That threat alone was enough to break the impasse. "Once we had that ability, we were able to quickly come to a resolution on the two properties and meet Bank of America's schedule," Mr. Durst said.

Using eminent domain for private projects has long been a divisive issue, but never more so since the Supreme Court upheld the right of officials in New London, Conn., to condemn homes and businesses to increase the tax base of one of the state's poorest cities.

That decision, coupled with reports of abuses in places like the predominantly African-American community of Riviera Beach, Fla., where plans called for replacing thousands of homes with upscale condos, has prompted a onslaught of legislation, both federal and state.

In November, the House of Representatives approved a bill by F. James Sensenbrenner Jr., Republican of Wisconsin, that would penalize government agencies for using condemnation powers for private projects by denying them economic development funds for two years.

Legislation has been introduced in 27 states, and more is coming, said Larry Morandi, the director of the environment, energy and transportation program of the National Conference of State Legislatures.

In California, where eminent domain can be used only in urban areas - and only when there is substantial evidence of blight - four ballot initiatives have been filed with the state attorney general's office to further limit condemnation, said John F. Shirey, the executive director of the California Redevelopment Association, a trade group.

The outcry has given heart to property-rights advocates. "We lost the Supreme Court case, but we're ultimately going to win in changing the way that eminent domain is going to be used in this country," said Dana Berliner, a senior attorney for the Institute for Justice, the most prominent advocacy group.

But around the country, developers and city officials say weakening or destroying the power to condemn property will seriously undermine efforts to rehabilitate decaying cities and might even hinder the rebuilding of New Orleans. Without eminent domain, the Inner Harbor, which played an essential role in Baltimore's success in building its tourist industry, could not have been redeveloped, said Ralph S. Tyler, the city solicitor.

Yet many developers and politicians have been loath to speak up, said Jeffrey Finkle, the president and chief executive of the International Economic Development Council, a professional group. For example, the Real Estate Roundtable, which represents the nation's largest real estate companies, has refrained from officially opposing the federal bill, said Roger Platt, a senior vice president.

Mr. Finkle also said the International Council of Shopping Centers, a trade group, had not put its lobbying muscle to work on the issue. But Herb L. Tyson, a lobbyist for the council, said he had privately urged lawmakers to preserve eminent domain for economic development. "Our feeling is that land use is a local issue," he said.

Mr. Finkle said that for many politicians, defending eminent domain was as perilous as endorsing gay marriage. "This issue is the third rail right now," Mr. Finkle said. "You step on it, you die."

One business group that has opposed restrictions on eminent domain is the Partnership for New York City, whose members include most of the city's top developers. Kathryn S. Wylde, the president and chief executive of the group, said her members opposed any efforts to alter condemnation procedures through federal or state legislation. "When you add restrictions on development, you are never quite sure what the results are going to be," she said. "We want to avoid political reaction to an issue that adds more problems and obstacles to economic growth."
Some lawmakers and public officials, however, are trying to carve out a moderate position, saying that reform is needed to address legitimate grievances. "What you're seeing is a coherent attack by the right on the power of eminent domain," said Richard L. Brodsky, a New York State assemblyman from Westchester County who is seeking the Democratic nomination for state attorney general. "It does no one any good to pretend that things aren't going to change. If we take that view, we're going to see the extreme position triumph."

Since June, three states have passed bills banning the use of eminent domain for economic development (though a measure in Texas exempts the new Dallas Cowboys stadium in Arlington). Michigan lawmakers have approved a constitutional amendment that is subject to a popular vote.

In a more cautious vein, Ohio has effectively denied state funding for one year to private projects in nonblighted areas that involve condemnation. The state also created a bipartisan task force to study the issue. "Ohio is saying, 'We need some breathing space,' " Mr. Morandi, of the National Conference of State Legislatures, said.

Mr. Brodsky's bills would increase protections for property owners. Homeowners, for example, would be guaranteed compensation equal to 150 percent of the value of their property. An ombudsman would oversee condemnation, which would be limited to projects that were part of a redevelopment plan approved by an elected local government. Government agencies would have to justify the taking of homes by weighing the benefits against the impact.

But Ms. Berliner said that requiring city council approval would not cure the abuses. "Cities know how to jump through their own hoops," she said.

One issue that has divided advocates of eminent domain is whether its use should be limited to blighted areas, as in California and other states. John D. Echeverria, the executive director of the Georgetown Environmental Law and Policy Institute, views eminent domain as a critical weapon in fighting sprawl, but he said that a finding of blight should not be a prerequisite. "Justifying eminent domain on a finding of blight invariably targets low-income communities," he said.
The word "blight" is not mentioned in the Sensenbrenner bill, which does, however, allow condemnation of contaminated land, known as brownfields. The bill has been referred to the Senate Judiciary Committee, but no hearings have been scheduled.

That may be because Congress has already passed stop-gap legislation. A vaguely worded rider to an annual appropriations bill in November restricts use of federal funds to support condemnation that "primarily benefits private entities." The measure also called for the Government Accountability Office to conduct a yearlong nationwide study.

Economic development officials, who contend that property-rights groups have exaggerated the threat from eminent domain, said they welcomed the study. "The public is understandably upset because they've not been told the whole story," said Mr. Shirey of the California Redevelopment Association.

Jones Lang LaSalle

January 18, 2006
Corzine Pledges a 'New Era' for New Jersey
By DAVID W. CHEN

TRENTON, Jan. 17 - Warning that New Jersey government had lost "the people's confidence," Jon S. Corzine was sworn in on Tuesday as the state's 52nd elected governor and pledged to usher in a "new era" marked by ethics reform and fiscal restraint.

Offering a sober message in blunt language, Mr. Corzine, a former Wall Street executive, said the state faced deep financial problems, and he complained that past failures of leadership had relegated key aspects of the government to the control of the state and federal courts. He also pledged wide-ranging ethics reform, including an elected state comptroller to monitor the government.

And Mr. Corzine, who stepped down as the state's senior United States senator to become governor, said he readily accepted the challenges.

"Hold me accountable," he said, echoing a line from his election night speech.

"It is simply inexcusable that we have a state government that again and again ranks low in public trust and esteem," he said at the Trenton War Memorial, with dozens of state officials on the stage and some former Senate colleagues, Joseph R. Biden Jr. of Delaware, Christopher J. Dodd of Connecticut and Paul S. Sarbanes of Maryland, in the audience.

"In the face of all our state can be, our self-government too often falls short of what it should be," he said.

In an inaugural address that was praised both by his fellow Democrats and the Republicans who fought so bitterly to defeat him last fall, Mr. Corzine, 59, urged state and local officials to put politics in the back seat, and quoted Woodrow Wilson as saying, "If you think too much about being re-elected, it's very difficult to be worth re-electing."

He called on his "fellow public servants to join in an effort to end the toxic mix of politics, money and public business." He promised in his 22-minute speech that he would be guided by one principle only: "What is best for New Jersey."

In the past, incoming New Jersey governors often used their inaugural addresses to map out their visions, and float a plan or two. In 1994, Christie Whitman called for an immediate cut in the income tax.

This time, there were no such twists, as Mr. Corzine hewed to the same broad themes of austerity and ethics that he honed during his campaign over the businessman Douglas R. Forrester. The day was purposely muted: There was no parade, and the inaugural ball at Princeton University's Jadwin Gym featured a buffet, not a sit-down dinner. Mr. Corzine chose his daughter, Jennifer, for the first dance, to the strains of "What a Wonderful World."

A former head of Goldman Sachs, a top Wall Street investment bank, Mr. Corzine spent more than $100 million of his own money to win election to the United States Senate and now to the governor's office. Unlike most of the politicians he must now deal with, he bypassed the standard political stations of the cross, never having served as a mayor, a county freeholder or a state legislator.

He is different in another way, too, as the state's first divorced governor in half a century and the only unmarried governor in the country. He was flanked by his mother, three children and other family members.

And though he served in the Senate for the last five years, he arrived here as something of an outsider who, though he has lived in New Jersey for the past three decades, spent his career in Manhattan on the trading floor and in the executive suite.

"I am a New Jerseyan by choice; I was born somewhere else," he said, referring to his roots in rural Illinois. "I love our state and her people, and I want our state to be known for the high ideals of its people."

He continued, "Let us resolve that having been through a period of turmoil, we will not go back to business as usual. We can and must move with a new determination into a new era of honesty, responsibility and prosperity with a government that earns the people's trust and trusts the people with the truth."

To back that up, Mr. Corzine issued his first executive order later in the day, requiring an additional 625 people on 30 state boards to file financial disclosure forms with the State Ethics Commission.

On paper, at least, Mr. Corzine starts with some advantages. As the state government's only official elected statewide, he occupies a state office considered the most powerful in America, equipped with a line-item veto and extensive power to appoint officials, including the attorney general and the treasurer.

Both the State Senate and the Assembly are solidly in Democratic control, though Mr. Corzine has had some awkward moments with the man he is replacing, former acting Gov. Richard J. Codey, who is the president of the Senate. Mr. Codey became governor after the sudden resignation of James E. McGreevey in 2004 because of an extramarital affair with a male aide and had considered running for a full term. But Mr. Codey stepped aside when Mr. Corzine indicated that he would spend whatever was necessary to win.

The challenges the Democrats face are daunting. New Jersey is facing a potential $5 billion deficit that could grow to $6 billion if Mr. Corzine gives residents, as he has promised, some property tax relief. Pension and health-benefit costs are climbing. A special fund to pay for transportation projects is about to run out of money. The state has also exhausted the money it borrowed to meet a court order to build schools, though it is still short of its goal. And New Jersey's troubled child welfare system is operating under the threat of being put into receivership by a federal judge.

"The process of re-establishing our financial integrity will not be painless," Mr. Corzine warned. In promising to rein in spending, he did not rule out raising taxes. But above all, he urged patience.

Several Republican leaders said they worried how Mr. Corzine would accomplish his goals and looked forward to dissecting his forthcoming budget. But on the whole, they applauded.
"I liked it; he just said what needed to be done," said State Senator William L. Gormley, a Republican from Atlantic City. "I'd label it a Joe Friday speech - just the facts, ma'am, just the facts."

Democrats also praised the speech. "I thought it was a challenge to us all," said State Senator Raymond J. Lesniak, a powerful Democrat from Union County. "To the extent that there was some scolding, maybe we needed some scolding."

But Senator Sharpe James, who is also Newark's mayor, said, "A majority of the men and women of the Senate and Assembly already agree with his hue and cry for reform and do not deserve to be painted with the same brush of mismanagement, neglect and being concerned only about re-election."

For all of the weightiness of the proceedings, there was still some spontaneity. Mr. Corzine opened his speech with a quip about how Mr. Codey had warned him about the 19-gun salute that traditionally preceded inaugurations.

"Beware, one day they'll be shooting at you," he said Mr. Codey told him.

But it was Mr. Codey - the state's most popular politician, according to polls - who delivered the biggest applause line. When the outgoing secretary of state, Regena L. Thomas, mistakenly called him "Speaker," Mr. Codey corrected her and noted that he was still the Senate president.
"I thought I lost another job," he joked, to laughter from the inaugural audience.

David Kocieniewski and Richard Lezin Jones contributed reporting for this article.

Jones Lang LaSalle


Codey Announces Technology Excellence Fellowships
Two Israeli Researchers to Train at World-Renowned Keck Center

(TRENTON) – Acting Governor Richard J. Codey today announced that the NJ-Israel Commission and the US-Israel Science and Technology Foundation (USISTF) have selected two aspiring Israeli researchers for Technology Excellence Fellowships at the world-renowned W.M. Keck Center for Collaborative Neuroscience of Rutgers University in Piscataway, NJ.

"The Keck Center has been the premier research facility for sharing research and encouraging international collaboration," said Codey. "The Center continually attracts researchers from around the world that are dedicated to a multidisciplinary approach and has made New Jersey a leader in neuroscience and stem cell research."

USISTF offer fellowships, known as the Technology Excellence Fellowship or TEF, for Israelis and Americans to train for eight weeks in each other’s country in various high-tech industries and institutions.

“Rarely does a state or region have the opportunity to develop a vision and shape the destiny of a new era of growth within a specific industry sector," said Commerce Secretary Virginia Bauer. "Both New Jersey and Israel are approaching this historical juncture - with tremendous potential for new opportunities and for leveraging their talent and capabilities worldwide.”

The newly chosen fellows, Dr. Giora Ram and Renana Patoka, will conduct cutting edge research and build partnerships to focus on finding a cure for spinal cord injuries and related neuroscience problems. Dr. Ram has been involved in the development of medical diagnostic equipment for neurology and cardiology for over 20 years. His company, Imexco, created a new brain monitor called the “Neuritor” which is currently marketed as an electroencephalogram (EEG) device. Ms. Patoka, from Proneuron, currently leads a pre-clinical research project on the efficacy of cellular therapy following spinal cord injury. Both Fellows were chosen not only for their experience, but for their understanding and desire to expand opportunities for partnerships in neuroscience research between Israeli and US companies and institutions.

According to Keck Center Director Dr. Martin Grumet, “This USISTF sponsored program will permit Israeli researchers from start-up companies to conduct cutting-edge research and build international collaborations to find a cure for spinal cord injuries and other neuro-related such as brain injuries, multiple sclerosis, and Alzheimer’s diseases.”

Each Fellowship is carefully crafted to meet the needs of its candidates and their industry. The Keck Center program will begin with an intensive three-day workshop on spinal cord injury research methods. The workshop includes lectures, demonstrations, and hands-on experience in all facets of spinal cord injury research. Featured is the MASCIS Impactor, a rat model of spinal cord contusion that has been adopted by over 100 of the world’s leading spinal cord research laboratories.

"Creating a match between the Keck Center and the TEF program was logical," said Andrea Yonah, Executive Director of the NJ Israel Commission. "We approached USISTF with the prospect of having a TEF Fellow come to the Keck Center. The goal of the program is to increase the international knowledge base of research methodology in order to spur innovative collaborative research between the two countries.”

“By harmonizing research methods and fostering binational cooperation, USISTF Fellows will be among the top researchers to work toward new treatments for spinal cord injuries while continuing to develop the infrastructure for collaboration between U.S. and Israeli biotechnology industries,” Valerie Herold, TEF Director stated. USISTF promotes harmonization of regulations, standards and procedures related to intellectual property, new drugs and medical devices, communications protocols and the environment to support technological growth and accelerate expansion to wider markets.

The New Jersey-Israel Commission was created to foster increased economic, scientific, educational and cultural relations with the State of Israel, one of the Garden State's most important trading partners. Israel is one of New Jersey's most important export markets, with $430 million in goods sent there in 2004 alone. In all, more than 50 Israeli companies have facilities in New Jersey, directly employing more than 1,000 workers.

Established in 1989, the New Jersey-Israel Commission is comprised of 125 members appointed by the Governor and eight members of and appointed by the State Legislature. The Commission operates out of the New Jersey Commerce & Economic Growth & Tourism Commission. For more information, visit.

Jones Lang LaSalle

U.S. Economy: Industrial Output Rises for Third Month (Update4)

Jan. 17 (Bloomberg) -- U.S. industrial production rose for a third month in December and factories were the busiest in five years, suggesting the Federal Reserve may keep raising interest rates to head off faster inflation.

Output at factories, mines and utilities rose 0.6 percent after a revised 0.8 percent gain in November, the Fed said today in Washington. Utility production climbed by the most since June, and the share of industrial capacity in use rose to 80.7 percent, the highest since November 2000.

Increased business spending on computers, communications equipment and other machinery may pick up the momentum from consumers heading into the new year, economists said.

Rebuilding after the hurricanes and a surge in natural gas production helped increase factory output last quarter at the fastest rate since 1999. Manufacturing in the New York area continued to expand this month, the Fed also said today.

``From the Fed's perspective, slack in the production sector continues to diminish, which should maintain Fed concerns about upside risk to inflation,'' said John Ryding, chief U.S. economist at Bear Stearns & Co. in New York.

Markets

The dollar rose against the euro and the yen as today's reports increased speculation the U.S. economy is growing fast enough to keep the Fed raising interest rates. The U.S. currency strengthened to $1.2106 per euro at 4:04 p.m. in New York from $1.2127 late yesterday. The dollar climbed to 115.42 yen from 114.96. The yield on the benchmark 10-year note fell 2 basis points, or 0.02 percentage point, to 4.33 percent at 4:09 p.m. in New York, according to bond broker Cantor Fitzgerald LP.

The Federal Reserve Bank of New York said today its index of manufacturing fell to 20.1 this month from a revised 26.3 in December. The so-called Empire State index is one of the first monthly manufacturing reports.

Economists expected industrial production to rise 0.5 percent, the median of 64 estimates in a Bloomberg News survey, after an originally reported 0.7 percent gain. Factory capacity rose from November's 80.3 percent, exceeding the 80.5 percent forecast. The Fed first reported the November figure as 80.2 percent.

Historically, 81 percent is the level where bottlenecks tend to develop, posing a risk of higher inflation, according to economists including Joseph LaVorgna, chief U.S. fixed income economist at Deutsche Bank Securities in New York.

Inflation

The Fed warned of rising industrial use and a stretched labor market in its Dec. 13 policy statement, when it said ``possible increases in resource utilization'' may ``add to inflation pressures.'' Capacity utilization rose in eight of 12 months last year and remained above year-earlier levels even in September, after Hurricane Katrina struck the U.S. Gulf Coast.

The Labor Department reported Jan. 13 that producer prices excluding food and fuels rose less than forecast, adding to suggestions that inflation remains tame. The consumer price index will be reported tomorrow.

Chicago Fed President Michael Moskow still sees inflation risks as industrial capacity tightens.
``There may be some slack remaining in manufacturing, but probably not much,'' he told a Chicago audience Jan. 12.

The central bank is expected to increase its benchmark interest rate for a 14th straight time, to 4.5 percent, when policy makers meet on Jan. 31, according to a Bloomberg News survey from Dec. 23 to Jan. 9.

Forecast

Economic growth probably slowed to a 3.1 percent annual rate the last three months of 2005 and will accelerate to 3.8 percent this quarter, the same survey showed.

Manufacturing, which accounts for more than 80 percent of the industrial-output index, rose 0.2 percent after a 0.4 percent gain. A decline in auto production held back factory output. Utility production rose 2.7 percent, the most in six months, following November's 0.4 percent gain.

``The most encouraging aspect of the report involves the continuing strong gain in technology output,'' Lynn Reaser, chief economist of the Investment Strategies Group at Bank of America in Boston, said in an interview. ``We had been hoping to see the pendulum swing from the consumer to the business sector. This report suggests that is indeed taking place.''

Mining production, which includes oil and gas, rose 2.5 percent last month after a 4.7 percent jump in November.

Refineries along the U.S. Gulf Coast region are still recovering after hurricanes disabled production. The colder winter months will increase demand for heating oil and gas.

Energy

``We've got tons of crude oil,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. ``The strategic reserve is virtually full and we've got refineries coming back on line'' from hurricane damage last year, he said. ``There's nothing fundamental to hold'' oil prices up.

The resumption of energy production in the Gulf helped lower crude oil prices 9.8 percent from a record $70.85 a barrel on Aug. 30, the day after Hurricane Katrina hit. That may encourage corporate spending.

U.S. industrial production last year began rising in May and didn't fall until September, after refiners, railroads and other companies were forced to shut down Gulf Coast operations because of the storms. Production grew in October by the most in six years as companies began to rebuild.

Business Equipment

Business equipment production, which includes transportation and information processing equipment, rose 0.5 percent in December, after increasing 1.3 percent the month before. Production of defense and space equipment rose 1.7 percent after increasing 0.2 percent.

``As long as the Fed doesn't raise rates too high, I'm fairly optimistic, and that's what I've been hearing from customers,'' said John Chambers, chief executive of Cisco Systems Inc. of San Jose, California, in a presentation at a National Retail Federation conference in New York today. Cisco is the No. 1 maker of equipment that directs Internet traffic.

Production of all consumer goods including autos rose 0.2 percent in December after falling 0.7 percent the month before. Output of automotive products, including cars, fell 2.7 percent after dropping 5.3 percent.

Honda Motor Co., the first Asian automaker to build cars in the U.S., will decide this year whether to add a sixth North American auto assembly plant or enlarge an existing one to meet growing demand, North American Chief Executive Officer Koichi Kondo said in a Jan. 9 interview.

Jones Lang LaSalle


Franklin Credit Management CEO Walks

Franklin Credit Management today announced that Jeffrey Johnson has resigned as president and CEO. He has also stepped down from the company's board of directors.
Johnson joined the specialty consumer-finance company, which has offices in Jersey City, 15 months ago. Effective immediately, Thomas Axon, founder and chairman, has been appointed president and CEO. - Martin C. Daks

BMO Financial to Launch Firm in Jersey City

BMO Financial Group, and investment professionals Flavio Bartmann and Conrad Voldstad have invested $50 million to launch Pallium Investment Management in Jersey City's Harborside Financial Center.

The company, which will formally open its doors around the third quarter, will be primarily focused on credit derivatives and has plans to develop other product lines. Pallium is currently recruiting portfolio and credit managers. - Martin C. Daks

Sapphire Adds New Director

Sapphire Therapeutics today announced it has added a new director and appointed a scientific advisory board. The Bridgewater-based biopharmaceutical company has named Herbert J. Conrad as its sixth director.

Conrad’s experience includes serving as the U.S. president of Roche Pharmaceuticals. He currently sits on the boards of Savient Pharmaceuticals, Celldex Therapeutics and Symphony Evolution.

Sapphire also announced the appointment of nine medical and pharmacology professionals to the company's first scientific advisory board. Sapphire, a biopharmaceutical company, licenses and develops small-molecule drug candidates to treat metabolic and oncologic diseases. - Martin C. Daks

Jones Lang LaSalle

Lenox leaving New Jersey

Lenox, the famed maker of china, said today it will move its corporate headquarters from Lawrenceville to Bristol Borough, Pa.More than 400 workers will be consolidated from sites in Lawrenceville and Langhorne, Pa., at the new site.

The loss of a company whose roots stretch deep into the corporate history of New Jersey is sure to rekindle criticism that state leaders aren't doing enough to keep businesses here - or develop new ones.Officials with the state of Pennsylvania, including the office of Gov. Edward Rendell put on a full-court press to recruit Lenox.

Lenox will lease 126,000 square feet of office space at the 183,000 square foot site for 12 years, with two five-year renewal options. The site is the former Dial Soap factory.

Jones Lang LaSalle


Developer hopes site is Jets' pick for facility
Florham Park parcel is a good fit, he says
Wednesday, January 18, 2006

BY LISA VERNON-SPARKSStar-Ledger Staff
In its quest for a new headquarters and training facility, the New York Jets have eyed a 20-acre parcel at the former Exxon facility site in Florham Park.

The land -- part of a rolling 485-acre swath near Route 24 and Park Avenue -- is a stone's throw from Morristown Airport, Morristown Memorial, hotels and housing.
The Jets have sought accommodations closer to the Meadowlands, where the team has played its home games for years. Practices are now held in Hempstead, N.Y.

Developer Mark Yeager of Gale Co. in Florham Park, who plans to build an office complex and hotel on the old Exxon site, is clearly pleased at the prospect of having New Jersey Sports and Exposition Authority purchase 20 acres of the property for Gang Green.

"The site meets their criteria. They wanted it available in and around, transportation, hospital facilities, housing and hotels and things that they found to be amenities, that would achieve their goals," Yeager said. "It works well. It's complementary use for us. It could fit well in the total context of our plan."

Jets officials didn't return calls for comment yesterday.

Borough Administrator John Massarano said Jets officials met with Yeager and borough officials last month to propose constructing a 120,000- to 150,000-square-foot building at the site.
It would be located on the property's 268-acre southern quadrant, near the Madison border, and would house offices, locker rooms and a training facility. There would be an indoor practice field and three outdoor practice fields.

Gale Co., which partners with the Rockefeller Development Group Corp., had planned to build 1.6 million square foot of office space, a hotel and day care on the site.

Two years ago, nearby municipalities -- Madison and the Chathams -- sued Florham Park over the redevelopment plan, saying it would generate too much traffic and possibly threaten a local aquifer used by the three communities.

The borough won the suit in 2004, but since then progress has been slow, possibly due to a sluggish market for office space, said Florham Park Mayor Frank Tinari.

"Nothing has even happened with the space, so I guess that's why they are considering alternatives," Tinari said.

"The headquarters and training facilities here sounds like a very exciting possibility. It will, first, get the Exxon property developed. Second, it would have very little traffic impact on ourselves and the neighboring communities," the mayor said.

The Jets are looking at a permanent move to the Garden State and The Meadowlands, joining the Giants, under a deal to build a new $1 billion joint stadium, which would be ready for the 2010 season.

Last week, legislators passed a bill that would expand the powers of the New Jersey Sports and Exposition Authority, the state agency that operates the Meadowlands Sports Complex. The measure allows the agency to purchase property outside the Meadowlands for a Jets' training complex.

Jets officials have considered about 20 sites around the state, including parcels in Short Hills, Jersey City and an ex-swim club in Pequannock.

Lisa Vernon-Sparks covers Flor ham Park. She may be reached at lsparks@starledger.com or (973) 539-7910.
© 2006 The Star Ledger
© 2006 NJ.com All Rights Reserved.

Jones Lang LaSalle


Planning Board to hear plan to rezone hospital
By: David Campbell , Staff Writer

The Regional Planning Board of Princeton is scheduled to hold a public hearing Thursday night on proposed Master Plan amendments for reuse of the University Medical Center at Princeton campus. The Planning Board meeting is scheduled to begin at 7:30 p.m. in the main meeting room of Princeton Township Hall. The proposed Master Plan amendments, if approved by the board, would permit the UMCP campus on Witherspoon Street to be rezoned for residential reuse with limited commercial and office uses.

Last month, the board referred the amendments to its Master Plan Subcommittee for further review after members of the public and some board members voiced fresh concerns about high-density residential redevelopment at the site and other issues. On Dec. 21, the subcommittee expressed consensus that the high level of residential density as proposed in the amendments should remain and be put to a vote by the Planning Board. The proposed reuse density includes up to 280 residential units on the main hospital campus in Princeton Borough.

However, a majority of the subcommittee rejected the idea of a new residential street running from Witherspoon Street to Harris Road that some residents have proposed to break up the 12-acre hospital block. Subcommittee members Yina Moore and Jacqueline Tillmann, however, strongly favored the through-street concept.

Nonprofit planning group Princeton Future also supports the proposal for "a new neighborhood street" through the hospital campus, according to an advertisement by the group. It is asking residents to urge the board to include language to that effect in the revised Master Plan. Hospital owner Princeton HealthCare System has announced plans to buy 160 acres owned by FMC Corp. at Route 1 and Plainsboro Road in Plainsboro for a new, $350 million hospital campus to replace the UMCP campus in Princeton.

Philadelphia-based firm Lubert-Adler Management Inc. has been named as developer for the Princeton site. Lubert-Adler has said it plans to redevelop the property in accordance with the amended Master Plan and whatever new zoning arises from it.

Princeton University was named as the buyer of two other PHCS properties — the nearly 2-acre Franklin Avenue parking lot adjacent to the hospital and the 9-acre Merwick Rehab Hospital & Nursing Care facility off Bayard Lane.

The university has said those two parcels could be good locations for new faculty, staff and graduate student housing, and maybe affordable housing. PHCS plans to break ground in Plainsboro in 2007 and open in 2010. PHCS has sought a certificate of need for the new campus from state health officials, which is still pending.

Jones Lang LaSalle


Interest Rate Commentary

Tuesday: 01/17/06 5:00 PM EST : Treasuries shrugged off earlier losses to finish unchanged at the short end and modestly higher at the longer end of the maturity spectrum. In the stock market, the indices spent the day in tight channels in negative territory. In late trading, the 10-Year Treasury Note was up by 5/32, lowering its yield to 4.33%; the Dow was down by 63.55 points to 10,896.32; and the Nasdaq was down by 14.35 points to 2,302.69.



The economic data of the day created some crosscurrents. The report on industrial production showed an expected pick-up in output last month but capacity utilization rose more than expected, stoking inflation fears. And the New York Fed's Empire State Index showed slightly weaker growth in the region's manufacturing sector this month than had been predicted, but elevated price indices also raised the specter of inflation.

However, the soggy stock market made Treasuries more attractive by comparison and the bond market slowly rose out of the red. Besides the inflation alarms, stocks were weighed down by a number of other factors. After the indices hit multi-year highs last week, traders are concerned that a consolidation may be imminent. The quarterly earnings report season is just beginning to heat up and a couple of disappoints could send stocks sharply lower.

So far, though, the market has been holding up relatively well. Despite today's losses, traders could have taken more profits as oil futures hit a three-and-a-half month high today. A barrel of light, sweet crude oil for next month delivery rose by $2.39 on the New York Mercantile Exchange to settle at $66.31. But the Dow only fell by 0.58% on the day; the S&P 500, 0.36%; and the Nasdaq, 0.62%.

Tomorrow, the issue of inflation takes center stage once again with the release of the Consumer Price Index. The data series has been jolted recently by oil-shocks, pushing it sharply higher in September and then down steeply in November. For December's reading, however, an in-trend increase of about 0.2% is predicted. A same sized increase is also anticipated at the core level, which excludes the volatile categories of food and energy. A tame reading would be welcomed by both markets.

The next meeting of the Fed's monetary policy committee will be held on the last day of the month and its approach will be heralded by tomorrow afternoon's release of the Beige Book, a summary of economic conditions which the committee uses as a reference in its deliberations.

Jones Lang LaSalle

Race to Reform

CFO Bob Davis and his cohorts have nine months left to clean up Computer Associates.
Alix Nyberg Stuart, CFO Magazine
January 01, 2006

Trapped for four hours on a flight packed with irritable travelers waiting for takeoff in Washington, D.C., Bob Davis couldn't help but wonder if the delay was an omen. He was on his way to a job interview. Even before the flight he'd had qualms, but as he sat on the runway as the hours ticked by, he really started to worry. Forty-five years old at the time, Davis had nimbly scaled the corporate ladder to win the job of chief accounting officer at Dell Inc.

Then came a call from a headhunter asking him if he would consider going to Computer Associates International Inc., the Islandia, New York–based software giant rocked by an accounting scandal. Part of the allure was a chance to work with Jeff Clarke, CFO of Computer Associates, whom he had met years earlier when Clarke was CFO of Compaq Computer Corp. But taking the post would mean joining the cleanup crew at a very messy corporate crime scene.

As he fretted about the risks of the new job, things got worse. Bad weather forced the aircraft to divert to Syracuse, New York, for several hours before finally landing at New York's LaGuardia Airport. At 3 A.M., Davis arrived at his hotel to find no room at the inn. Sent across town to a fleabag motel, he had time for only a half-hour nap before showering and shaving for a full day of interviews. But despite the rocky start, Davis was intrigued by the opportunities at CA, as the company is now officially known. Three months later, lured by a pay package that could be worth $2.3 million or more over the next two years, he joined the company.

As chief financial officer, Davis is a key member of the team working to resurrect the $3.5 billion company. Once one of the stars of the software industry, CA crashed in 2002 when federal regulators charged certain top executives with falsifying financial records in a $3.3 billion fraud that began in 1998. Now operating under an innovative legal deal called a deferred-prosecution agreement, or DPA, CA's executives are racing to complete reforms while bolstering the company's core business in an increasingly competitive software market.

Davis has joined a group of heavy hitters. CA's CEO is John A. Swainson, 51, a 26-year veteran of IBM Corp., where he had held key product-development and sales jobs. CA's chief operating officer is Clarke, 44, who became executive vice president of global operations for Hewlett-Packard Co. after it acquired Compaq in 2002. Of CA's top 35 executives, half were recruited within the past two years. "It's definitely a new CA," says Jean-Pierre Garbani, a vice president at Forrester Research Inc., a technology- and market-research firm in Cambridge, Massachusetts. "But the company's success depends on how well they execute, and it's too soon to know that yet."

The Watchful Overseer The deadline looms. By September 30, CA will have had to fulfill a host of obligations or else face charges of fraud and obstruction of justice under terms of the DPA. Some $80 million worth of financial-reporting software has to be installed and functioning adequately. CA's finance department must be reorganized and strengthened. Although CA has met many of the terms of the DPA, such as hiring a chief compliance officer and controllers for each of its five business units, much work remains to be done.

Meanwhile, CA is laboring under the watchful eye of an overseer. The DPA specifies that CA's rehabilitation is subject to the scrutiny of a court-appointed independent examiner, Lee S. Richards. A partner in the law firm of Richards Spears Kibbe & Orbe LLP in New York, Richards, who declined to be interviewed for this article, maintains an office at CA's headquarters. His reports to the board, the court, and federal agencies are confidential. CA would not disclose what, if any, recommendations he has made to the new executive team.
CA also must mend its reputation with customers, shareholders, and Wall Street.

One of its largest institutional investors is Private Capital Management LP, a unit of Legg Mason, which holds 11.6 percent of CA and has been accumulating shares since 2000. The money manager made headlines recently by forcing Knight Ridder, the newspaper chain, to put itself up for sale. Through a spokesman, PCM declined to comment on CA. CA still faces the wrath of other angry shareholders who have filed lawsuits against the company, among them Texas billionaire Sam Wyly.

So the job is a risky bet for Davis. After all, the finance department was the scene of the crime — and the cover-up — at CA. Much of the work of rehabilitation rests squarely on his shoulders. If successful, the financial payoff could be big. CA lured Davis with a signing bonus of $275,000. His base annual salary is $525,000. If he meets certain targets, he will earn a bonus in his first year of $525,000. CA also has promised him $2.2 million in long-term incentives such as stock options and restricted stock. But Davis says the move wasn't just about the money. "It was frankly about the opportunity," he says. "There was limited opportunity to move up at Dell."
Still, colleagues were surprised when he took the job. James Schneider, CFO of Dell and his former boss, admits he was baffled when Davis announced he was leaving Dell for CA. Davis is "a good, solid guy," says Schneider, "but I wouldn't have thought of him as a risk-taker." (Dell had been very generous with Davis. He made approximately $3.1 million by cashing in his stock options in 2003 and 2004.)

Building a Strong Team Known for his technical accounting skills, Davis began his career at PricewaterhouseCoopers LLP in 1980, working on audit and regulatory matters in Washington, D.C. After getting his MBA at Columbia Business School, he joined MCI as senior manager in the corporate controller's group in 1994. Schneider, who was also at MCI at the time, says that he would often pull Davis in to work on projects for him, although Davis did not report directly to him. Schneider left to join Dell in 1996. Several months later, Davis, in pursuit of fresh challenges, joined Dell as vice president of worldwide finance and planning for the enterprise systems group.

At Dell, Davis rose through the ranks to become chief accounting officer in part by contributing to the company's famously disciplined growth strategy. "When I look at who really helped us get to where we are, Bob is one of the core guys," says Schneider. Among other things, Davis installed sophisticated software systems that provided top executives with detailed financial data so they could make better strategic decisions for Dell.

At CA, Davis is focusing on building a strong team and improving internal systems. One top priority: clearing up the three material weaknesses that stand in the way of a clean 404 opinion. With cash flow of about $1 billion a year, Davis says, CA is in a strong financial position. But, he adds, "there's plenty of opportunity to get the company growing and more profitable."

Davis is working closely with Clarke, who had championed Davis at CA. Clarke joined CA as CFO in 2004 and is experienced in complex corporate-restructuring projects. He led the team overseeing one of the biggest mergers in the history of the computer industry: Hewlett-Packard's $19 billion acquisition of Compaq Computer. Like Davis, Clarke has a hefty pay package from CA that could be worth $4.5 million over the next two years.

Indeed, CA's generosity to its new executive team is stirring controversy among shareholders and corporate watchdogs. CEO Swainson could earn as much as $12.8 million over the next five years. "CA's board has not yet learned either restraint or resistance" when it comes to compensation, says Nell Minow, co-founder of The Corporate Library, in Portland, Maine, a research firm that rates companies based on corporate-governance practices. Christopher Lofgren, a CA board member and president and CEO of Schneider National, a transportation and logistics company in Green Bay, Wisconsin, defends the company's pay packages. Seasoned executives with impeccable reputations command a high price in today's market, he says.

In his one-year tenure as CA's CFO, Clarke began cleaning up the finance department while working with the board to negotiate the deferred-prosecution agreement with the SEC and the Department of Justice. He restated financial results for fiscal years 2000 and 2001 and began to clamp down on sloppy internal financial procedures. He also helped craft a restructuring plan that involved cutting 5 percent of the workforce and oversaw the $439 million acquisition of Netegrity, a network security software company in Waltham, Massachusetts. Clarke relinquished the title of CFO after Davis came on board in early 2005, and remains COO, a title he garnered in April 2004.

With the independent examiner looking over his shoulder these days, Davis says there's a heightened "sense of urgency and momentum" on often-tedious compliance work. Richards and the team he has hired to review finances at CA "don't pull any punches if they see issues," says Davis. Most of their inquiries, he notes, involve matters that are now part of the routine at CA. "The DPA is basic blocking and tackling for finance," he says. "If we can't comply with the DPA, we've got bigger issues."

Imperial Court of China CA has formed a review group that circulates drafts of quarterly reports to 70 senior managers in its finance, legal, and sales departments before the documents are filed with the SEC. Controllers now oversee the finances of the company's five business units. The executive roster includes a controller, a chief accounting officer, a new head of internal audit, and a new separate office for financial planning and analysis. Within the finance department, there are 100 subcertifiers for financial statements, which "drives down accountability," says Davis.
Changing CA's culture is another priority. Under Charles Wang, who founded the company in 1976, CA was run like the Imperial Court of China. Only a few top executives held decision-making power and there was no effective enterprisewide data system. In fact, CA was a breeding ground for fraud in part because its management and technology couldn't keep pace with its rapid growth in the 1990s.

Federal investigators say the fraud began in 1998 when company executives started backdating sales contracts to boost their bonuses. Wang resigned as chief executive in 2000 but remained as chairman until his resignation in 2002. He was not charged with any wrongdoing in connection with the scandal.

Davis and his colleagues are trying to push accountability deep down into the organization. "We want a team that's empowered," he says. Toward that end, Davis says he has hired close to 150 staffers. A new employee "ethics hotline" has received 22 calls since it was established in April. Meanwhile, Davis encourages staffers to E-mail him directly, and holds informal monthly breakfast meetings with small groups of them.

CA is also working to fortify its product line and integrate the companies it has acquired recently. In the past two years, CA has spent $1.2 billion to snap up eight software businesses, including Netegrity; iLumin, a storage-management software company; Niku, an IT-management software company; and Concord Communications, which makes network-monitoring products.

In November, CA introduced a new version of Unicenter, its popular suite of integrated software modules, a move that the company hopes will help propel growth. For the six months ended September 30, 2005, CA's revenues increased 8 percent, to $1.8 billion, though $73 million was due to currency gains and its two most recent acquisitions. Net income was $135 million, compared with a $51 million loss in the six-month period last year.

Despite the strong results at CA, many industry analysts are reserving judgment. Some are concerned about a slowdown in the market for mainframe software, CA's primary market. Others are concerned that the product line is dated and lacks true innovation. "It's wait-and-see," says Kim Caughey, an equity analyst covering software companies for Fort Pitt Capital Group, in Pittsburgh, which holds a stake worth $11.5 million in CA.

Davis, however, takes such skepticism as a spur to put the overhaul into overdrive. In fact, he says the most stressful part of the job for him is "making sure the urgent doesn't drive out the important," such as his long-term goal of creating a training, mentoring, and development program for his finance staff similar to the popular ones at Dell, Cargill, and GE. "When someone graduates from college, I want CA to be on their short list for employment," says Davis. And so long as the candidates don't have the travel nightmares Davis faced on his first trip to CA, he's confident he can win them over. "We may be hitting on only three or four of six cylinders right now," he says, "but we're starting to move things in the right direction."
Alix Nyberg Stuart is senior writer at CFO.

Test Case for DPAs

CA was one of the first companies to be allowed to restructure under a deferred-prosecution agreement (DPA). Since CA's DPA in 2004, about a dozen more companies have cut similar deals, including the accounting firm KPMG and insurance giant American International Group Inc. Under a DPA, the feds achieve a kind of coerced cooperation. To avoid prosecution, companies admit wrongdoing, promise reform, and help prosecutors convict the insiders responsible for the illegal activity. As one of the first to negotiate a DPA, CA is being watched closely by the financial and legal communities.

DPAs could "achieve a host of beneficial results — admission of guilt, restitution for victims, a disciplined process of internal reform — without causing the adverse consequences that come along with a full prosecution and conviction," says David Pitofsky. Pitofsky was the lead federal prosecutor who helped broker the deal with CA, and is now a partner in the New York office of law firm Goodwin Procter LLP. "The consequences of failing are horrific for a company," says Pitofsky. "They'll move heaven and earth to fix problems" reported by the independent examiner. For CA, the stakes are high because it is one of the most prominent companies to negotiate such a deal. Federal regulators will use the company as a test of the DPA's effectiveness. — A.N.S.