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Judge gives preliminary approval of Bristol-Myers' settlement
2/9/2006, 9:52 a.m. ET
By THERESA AGOVINO The Associated Press

NEW YORK (AP) — Bristol-Myers Squibb Co. said Thursday that a judge gave preliminary approval for a proposed $185 million settlement to end a class-action lawsuit that alleges the drugmaker artificially inflated its stock price by making false and misleading claims about an experimental heart drug.

U.S. District Judge Stanley Chesler entered preliminary approval of a settlement for the case pending in the U.S. District Court in New Jersey, relating to the drug known as Vanlev, the company said. Vanlev was never approved.

Under the proposed settlement, Bristol-Myers Squibb will pay $185 million to create a settlement fund to pay the claims of certain investors who purchased Bristol-Myers Squibb common stock during the period from Oct. 19, 1999 through March 20, 2002.

Last month, Bristol-Myers announced it had reached a settlement with plaintiff lawyers and had established a reserve to settle the case. At that time, Thomas Dubbs, a plaintiff's lawyer in the case, said he hoped the settlement would act as a deterrent to other companies hiding damaging information.

The settlement also includes provisions regarding the company's commitment to the public disclosure of the results of certain clinical trials, and the registration of trials on an appropriate publicly-accessible database.

The shareholders' lawsuit alleges that company executives praised Vanlev as a potential blockbuster despite the side knowing it had potentially severe side effects as early as 1996.
But on April 19, 2000, Bristol-Myers announced it was withdrawing its application for approval from the U.S. Food and Drug Administration because of side effects. The stock fell 39 percent, according to the suit.

In July of 2000, Bristol-Myers said it would test Vanlev at lower doses where the problem of side effects didn't seem as severe. The complaint alleges that there were still problems at the lower doses, and that Bristol-Myers didn't announce it to the market until March 20, 2002, sending the stock down more than 15 percent.

The company said it agreed to the settlement without any admission of wrongdoing.
The court has set another hearing in the case for May 11.

Bristol-Myers shares fell 13 cents to $22.61 in early trading on the New York Stock Exchange. Its shares have traded in a 52-week range of $20.70 to $26.60.

Copyright 2006 Associated Press. All rights reserved.

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SELLING SALES SPACE ON WALL ST
Peter Slatin

Could a lease by one of the world's high-fashion retailers provide the long-awaited key to unlocking Wall Street's perennial retail freeze, and beyond that, to thawing out the district's commercial cold spell?

Years before the attacks of 9/11 destroyed the popular retail concourse at the World Trade Center, boosters of downtown Manhattan had pushed hard, but with little success, to bring better, bigger and more exciting stores to the Financial District. The scarcity of restaurants and high-quality shopping outlets hurt both office and residential growth. As financial services firms migrated to Midtown Manhattan and to the World Financial Center, with its self-contained restaurants and shopping, the 9-to-5 quality of street life has been exacerbated by the absence of residents in the historic Wall Street core. The non-shopping environment has been a major obstacle to transforming the area into a 24/7 urban CBD.


Artist rendering of 23 Wall Street

There is still no clear path to realizing that dream, but signs continue to emerge that it is getting closer. Hermes has signed a long-term, 8,000-square-foot lease at 15 Broad Street, developer Shaya Boymelgreen's condo project currently in construction across from the New York Stock Exchange; Boymelgreen also acquired 23 Wall Street, the adjoining building, when he bought 15 Braod in 2003. Hermes no doubt likes the proximity to bonus-winning Wall Streeters at a discount (compared with 57th Street) rent of $125 a square foot.

Hermes joins some other nearby newcomers, notably steakhouse Bobby Van's at 25 Broad and a BMW showroom at 67 Wall; a financial museum is also coming to 48 Wall. And with Hermes in place, Boymelgreen may have more success monetizing the rest of his investment on the rest of his parcel: the 200,000-square-foot, six-level 23 Wall Street. There, Boymelgreen is hoping to create what could become a central retail hub for the Financial District. According to his broker, Alice DiMarzio of Newmark Knight Frank, Boymelgreen wants to see the space built out as a high-end indoor mall with a European flair, including a salon and spa on the top three levels. The building's rooftop will serve as a garden for residents of Downtown, the adjoining condo at 15 Broad designed by Phillippe Starck.

Another option for 23 Wall is a high-end boutique hotel, and that is what is drawing the most interest. Buyers are also watching sales at the 106-unit Witkoff-Cipriani condominium venture barely a block east at 55 Wall Street. Nearly half of those units have been sold.

Boymelgreen may not have to deal with the headache of retail development, however: interest from buyers in the property has increased, even as brokers and hoteliers who turned their noses up at downtown in recent years have begun to have second thoughts, says DiMarzio. Boymelgreen paid $100 million for the two-building parcel in 2003 and would easily make his money back on a sale of 23 Wall, which is expected to sell for about $115 million.

George Keller, a broker with Cushman & Wakefield's Lower Manhattan office, says that buyers have been "kicking the tires" at 23 Wall but may still be waiting for the district to reach a "critical mass" before putting down hard cash. Like many, Keller believes retail will flourish downtown. "This is a difficult piece of space," he says. "But it's a great location and a great looking building."

DiMarzio, who was involved in the sale to Boymelgreen and has worked on the building since, says that both interest in the building and its valuation have grown, and that the Hermes deal has raised both to new levels. In the immediate arc of 23 Wall, Boymelgreen also owns 14 Wall Street, which remains an office building, and 20 Pine Street, which he is developing as a condominium, barely a block away.

Jones Lang LaSalle

Work Starts on $34M Affordable Housing Complex
By Eric Peterson
Last updated: February 8, 2006 01:53pm

(To read more on the multifamily market, click here.)
NEWARK-Work is set to start on Spruce Gardens, a 105-unit affordable housing complex representing the sixth phase of the redevelopment of this city’s troubled Central Ward, launched by the Newark Housing Authority. The latest project is costing $33.8 million to construct, or $322,000 per unit. The overall cost of the six phases, totaling 498 units, has been put at $144 million.

Spruce Gardens is being done as a joint venture between Roizman Development Inc. of Plymouth Meeting, PA and an affiliate of CharterMac Capital of New York, a CharterMac subsidiary. As part of the deal, another CharterMac subsidiary is providing $11.5 million in equity for tax credits generated by Spruce Gardens. The funding brings to a total of more than $69 million in the firm’s equity contributions to the redevelopment program, according to Justin Ginsberg, managing director of CharterMac Capital.

“These developments are urban revitalization at its best,” Ginsberg says. “Public and private entities worked together to make a plan happen.”

Set to rise on eight acres on the site of the demolished high-rise Stella Wright public housing development, the Spruce Gardens complex will consist of 13 two-story and townhouse buildings. The majority of the units will be designated for public housing residents, with the rest targeting residents earnings 60% or less of the area’s median income. Completion is slated for early 2007.

“We’re offering residents something they’re very much in need of, large apartments to accommodate extended families,” says Israel Roizman, CEO of Roizman Development. “Spruce Gardens apartments will be among the largest in the vicinity, an area where more than 40% of households contain 10 or more persons.”

“Spruce Gardens will continue the transformation of the neighborhood, and will also draw additional capital to the area,” Ginsberg says.

All six phases of the Central Ward redevelopment fall under the HUD’s HOPE VI program, which generally aims to leverage federal funding for private investment. The Spruce Gardens project is also getting $20 million in funding from the Newark Housing Authority via HUD’s HOPE VI program, and the latter will provide a support services package to residents of the new community.

Jones Lang LaSalle

$25M Finances Two Office Buildings
By Eric Peterson
Last updated: February 8, 2006 09:59am

(To read more on the debt and equity markets, click here.)
ROCKLEIGH, NJ-In two separate transactions, the White Plains-based Houlihan-Parnes/iCap Realty Advisors has arranged financing for buildings owned by GHP Office Realty. The latter, also based in White Plains, was formed in 1999 by principals of Houlihan-Parnes/iCap and Andrew Greenspan.

In the larger of the two transactions, Houlihan-Parnes’ Kevin Neuner arranged a $14-million first mortgage on the two-story, 194,000-sf office building on 12 acres at 8 King Rd. here. The 10-year loan is fixed at 5.63%, with two years of interest-only payment followed by a 30-year amortization, according to Neuner. The non-recourse loan was placed without a lender fee.

Built in 1973 and recently renovated, the multi-tenant GHP-owned and -managed property is currently 95% leased. As reported by GlobeSt.com, Spectra East, a subsidiary of Germany’s Frensenius Medical Care, renewed its existing lease of 85,000 sf and expanded to a total of 106,000 sf at the building in December. Other tenants include the New York Times, and 3M Medical Equipment.

In the second transaction, Houlihan-Parnes’ Gus Costaldo arranged a $10.5-million first mortgage loan for the refinancing and renovation of GHP’s 29 Thanet Circle, a 53,000-sf office building in Princeton. According to Costaldo, the loan terms consist of a floating interest rate of 30-day Libor plus 250 basis points, interest only, with a two-year term. The loan represents 75% of the asset’s appraised value, allows for an extension and can be prepaid without penalty.

Jones Lang LaSalle

City Takes 84,000-SF Site for $7M
By Eric Peterson
Last updated: February 8, 2006 10:09am

HOBOKEN, NJ-The 84,000-sf site at 1600 Park Ave. here has been sold to the city for $7.1 million. The transaction follows several attempts to turn the property into an apartment community. The sale transaction itself was brokered by Bob De Ruggiero, president of the locally based Robert De Ruggiero Inc. Realtors.

The seller, a local group called 61 Hoboken 2 Associates, actually contracted to sell the property nine years ago to Crown Plaza Towers LLC and principal Sandford Weiss. Attempts since then to get approvals for a residential project failed, even after the original proposal of twin 23-story towers containing 412 apartments was scaled back.

According to De Ruggiero, the City of Hoboken had expressed interest over the past year in buying the land for use as a public park. The sale to the city was a cooperative effort among David Zahner of 61 Hoboken 2 Associates, Weiss and attorneys representing the city. The acquisition is being funded by bonds from the Trust for Public Lands.

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Parksite Inks 112,000-SF Lease
By Eric Peterson
Last updated: February 7, 2006 01:53pm

(To read more on the industrial market, click here.)
NORTH BRUNSWICK, NJ-Seagis Property Group bought the vacant Permacel facility here in November and quickly launched an overhaul of the 350,000-sf industrial building. Now, the company has hauled in a major tenant for nearly one-third of the building.

Parksite Inc. has signed a lease for 112,000 sf on behalf of its Parksite Plunkett-Webster division at the now-renamed Seagis Corporate Park along Route 1. Parksite was represented in the long-term lease by Thomas Sullivan and Scott Belfer of the East Brunswick office of CB Richard Ellis; Seagis was represented by Jason Goldman, Frank Caccavo and Andrew Siemsen of the Iselin office of Cushman & Wakefield of NJ. Terms of the signing were not released.

“Seagis is making a significant capital investment to improve the site and return it to a productive facility,” says Joe Croft of Parksite Inc., noting that the current renovation is slated for completion in Q2 of this year. His Batavia, IL-based company, which markets a variety of branded and specialty building products, will relocate its regional operations from South Plainfield, to the site once the overhaul is complete.

“We hope that PPW’s occupancy and the overall redevelopment of the site will continue to bring new jobs and vitality here,” says Seagis senior vice president Dave Gibbons. “We’ve also been encouraged by the community’s support for this project.”

Situated on approximately 30 acres, Seagis Corporate Park is located adjacent to the Technology Centre of New Jersey, a project of the New Jersey EDA. With the PPW occupancy, Seagis Corporate Park has just under 240,000 sf of multi-use space still available.

As reported by GlobeSt.com, Seagis bought the property from Permacel Inc. for $7.8 million, or a little more than $22 per sf of building space. Permacel, a maker of specialty tapes, had used the site for manufacturing and distribution, but it became surplus property in 2004 when Permacel sold a couple of its divisions.

Seagis, based in West Conshohocken, PA, was founded in early 2005 by former execs of Keystone Property Trust after that company was sold to ProLogis. The company was launched with the backing of a $250-million equity investment by Principal Enterprise Capital, and in its first year of existence has been actively acquiring industrial properties from New Jersey to Florida.

Jones Lang LaSalle

Merger Fuels Lease Extension, Expansion for Accounting Firm
By Eric Peterson
Last updated: February 7, 2006 09:14am

EDISON, NJ-Weiser LLP, a top 20 national accounting firm, has extended and expanded its lease at 399 Thornall St. within M. Alfieri Co.’s Metropark Corporate Campus here. The firm, which had occupied 10,500 sf within the building, has signed on for a total of 25,000 sf for 15 years.

Weiser’s original lease had seven years to run, but the firm needed more space as a result of its merger with rival accounting firm Lipman Selznick & Witkowski in September 2005. Owner M. Alfieri, locally based, was represented in-house by Andy Parella. Weiser, meanwhile, was represented by Norman Baker, managing principal at Newmark Knight Frank.

“For Weiser, its current lease was extended while keeping current costs low,” Baker says. “LSW received great benefits to relocate and combine spaces. And the landlord was able to secure a long-term, full-floor lease with a credit worthy tenant.”

Further terms were not released; however, space at the building is listed on M. Alfieri’s website with an asking price of $31 per sf. 399 Thornall St. is part of a 14-story, two-building class A complex totaling 660,000 sf within the larger 1.5-million-sf Metropark Corporate Campus.

As part of the consolidation of the two merged firms, LSW is vacating its 13,500 sf at Lincoln Property Co.’s Raritan Center III, also known as 101 Fieldcrest Ave. here. The latter space will be marketed for sublet by Newmark Knight Frank managing principal Paul Giannone.

Jones Lang LaSalle

Retailer Leases 45,000 SF of Office/Warehouse Space
By Eric Peterson
Last updated: February 7, 2006 09:16am

BORDENTOWN, NJ-KOR Cos., based in Wall, started work last year on the first spec building within its Central Crossings Business Park here, and now that building has its first tenant. Stationary and gift retailer Blue Tulip has signed on for a total of 45,000 sf of office and warehouse space within the 145,000-sf building.

KOR was represented in the transaction by Stan Danzig and Jules Nissim of Cushman & Wakefield of NJ, while Blue Tulip was represented by C&W’s Mary Ryan. Terms of the lease were not released.

“This lease is a validation of our strategy for spec development in this market,” says Harry Kantor, KOR’s president and CEO. “There is extraordinary demand for new high-tech space at Exit 7A.”

The new building is part of a 170-acre site within the NJ Turnpike Exit 7A submarket that’s cleared for an ultimate build-out of 1.65 million sf of space. Primary targets for the master planned Central Crossing Business Park are consumer products distributors and third-party logistics providers.

Blue Tulip, meanwhile, is a Princeton-based chain that currently has nine stores in four states, with four of those stores in the Garden State.

Jones Lang LaSalle


Assessing Sovereign deal

The chairman of the Spanish bank Santander Central Hispano, Emilio Botin, said he expects to close the deal soon to pay $2.4 billion for a 19.8 percent stake in Sovereign Bancorp, and defended the transaction against the criticism of some of Sovereign's shareholders.

The purchase would make Santander the single biggest shareholder in Sovereign Bancorp.
"We expect to close this deal in the next few months, before the summer. ... When Santander does a deal, it always defends the interests of minority shareholders. ... this deal is good also for Sovereign shareholders," Botin said.

The Santander investment, which Sovereign will use to take over another bank, Independence Community Bank, needs the approval of various U.S. regulatory authorities.

The deal has come under fire from some Sovereign shareholders who have complained it skirts corporate governance regulations and is value-destroying. The New York Stock Exchange cleared the deal after Santander and Sovereign modified some of the original terms.

The dissident shareholders have appealed to the Securities and Exchange Commission, which is considering whether or not it will intervene in the case.

-- Dow Jones Newswires

Jones Lang LaSalle


Burning Questions
Thursday, February 09, 2006

Tony Zook, chief executive of AstraZeneca's U.S. operations, based in Wilmington, Del., said the British drugmaker has 31 manufacturing sites in 20 countries, giving it a leg-up on its American competitors.

AstraZeneca has enough cash to ramp up spending on research and development or buy the pipelines of rival drugmakers. What's your next move? Our No. 1 priority is to support our pipeline. We want to continue to develop the compounds in our labs. We have 25, and there are three in late-stage development.

We're looking at outside opportunities that are available. But we don't see a merger or the kind of broad acquisition we are speaking to. We don't need that type of transitional event. Would you be in the market for smaller biotechnology companies or drugmakers at discount prices? We'll look at opportunities on a case-by-case basis. Wall Street analysts suggest European drugmakers have the upper hand on their American counterparts, in part because of their business models. Do you agree? There is a benefit from being a multinational and global firm.

Our presence in emerging markets are stronger as a result.

AstraZeneca is the No. 1 company in the emerging market of China. We're also making inroads in Russia. Three generic companies are challenging AstraZeneca's patent for the blood-pressure drug Toprol XL, your top seller with $1.74 billion in sales last year. Should the United States and European Union take steps to curb patent challenges? I'm not in a position to comment on those broad policy issues.

-- George E. Jordan

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Exelon-PSEG deal likely to close later in year
Thursday, February 09, 2006
BY TOM JOHNSON
Star-Ledger Staff

With the planned acquisition of Public Service Enterprise Group by Exelon facing additional and tougher regulatory scrutiny, the two companies yesterday said they expect to close the deal in the third quarter of this year, rather than the second quarter.

The announcement came after an independent analyst's review of plans to sell certain power plants owned by the two companies found it would do little to resolve concerns that the combined company would be able to swing energy prices higher to consumers.

Following the release of the report last week, various parties in the case asked the analyst, the PJM Market Monitor, to conduct additional tests of possible divestiture scenarios -- a step that extended hearings in an administrative law court case by at least 30 days. The market monitor is part of the PJM Interconnection, which oversees the power grid serving 50 million people in area stretching from Illinois to the East Coast.

"While we're disappointed with the schedule delay, we fully appreciate the need to satisfactorily address market power concerns raised by the proposed merger," said Elizabeth Moler, executive vice president of Chicago-based Exelon. "Both Exelon and Public Service continue to look forward to a timely completion of the merger."

The $12 billion deal, first announced in December 2004, has won regulatory approvals from state officials in Pennsylvania and the Federal Energy Regulatory Commission but has run into intense opposition in New Jersey from consumers, large manufacturers and retail interests and industry rivals.

They fear the company, which would be the biggest power supplier and largest electric utility in the nation, could drive energy prices higher in the region.

If the deal doesn't win all regulatory approvals by June 20 -- a prospect that seems unlikely unless a settlement is reached -- both companies have an option to walk away from the deal without paying any penalty.

Paul Rosengren, a spokesman for Newark-based PSEG, said neither company has any interest in dropping out of the deal.

Jones Lang LaSalle


Pfizer CEO expected to share new strategy
With over-the-counter unit up for sale, planned meeting will address challenges
Thursday, February 09, 2006
BY GEORGE E. JORDAN
Star-Ledger Staff

Although its share price surged yesterday, Pfizer still has some explaining to do.
The stock was up nearly 6 percent after the pharmaceutical giant said it may sell or spin off its over-the-counter products division.

The announcement was made in advance of a meeting tomorrow with analysts and investors, the first since the company abruptly pulled its 2006 and 2007 earnings guidance last fall, sending the stock price plunging.

Under pressure from investors, Hank McKinnell, Pfizer's chief executive, is expected to announce new 2006 earnings projections and detail the strategy to solve complex issues facing the world's largest drug company -- among them, generic competition and sluggish sales of some key drugs.

In an effort to boost earnings, Pfizer announced Tuesday that its Morris County-based over-the-counter business might be for sale. The company said more details would be released tomorrow.

J.P. Garnier, chief executive of GlaxoSmithKline, yesterday said the British drugmaker was a likely bidder. "If an acquisition gets us into a fast-growing business, we are very interested," Garnier said after announcing the company's earnings per share in 2005 ere up 21 percent on sales of $37.8 billion.

Other possible suitors, analysts say, include Johnson & Johnson, Procter & Gamble, Norvartis and Unilever. The companies all declined to comment.

Pfizer's OTC division markets such popular brands as Lubriderm, Listerine, Rogaine, Benadryl and Sudafed, which together accounted for about 7.6 percent of Pfizer's revenue last year.

Over-the-counter products are hot. They provide healthy profit margins without the expense and risks of prescription drug discovery and testing. Foreign companies are charging into the business. Last year, Bristol-Myers Squibb sold its consumer products business to Novartis for $660 million.

GlaxoSmithKline's interest gives Pfizer momentum going into tomorrow's meeting in Midtown Manhattan, where the company last year announced a company-wide realignment and $4 billion in sales staff reductions and other spending cuts.

Last month, Pfizer reported that earnings and revenue fell in the fourth quarter, but saw increased sales of its most lucrative drug, Lipitor, a cholesterol-lowering agent that is the world's No.1-selling medicine with sales last year of $12.2 billion. Lipitor's sales weakened, however, in the second half of the year.

This year, Lipitor could face additional pressure. Merck's Zocor, a rival drug, is set to lose patent protection, and some analysts speculate generic versions of Zocor could dampen sales of Lipitor.
Barbara Ryan, an analyst at Deutsche Banc, suggested Pfizer could announce even more spending cuts tomorrow "that will push total projected savings beyond the previously announced $4 billion target."

She also suggested Pfizer must prove its net income is "not strictly a function of Lipitor sales."
Analysts estimate Pfizer could fetch between $6 billion and $11 billion from the sale of its over-the-counter portfolio, money that could be reinvested in prescription drug discovery or in acquiring companies with late-state drug candidates.

"With more cash on hand, we would expect Pfizer to engage in more deals," wrote JP Morgan analyst Chris Shibutani in a note to investors. He said "a prudent use of cash" would be to acquire drug candidates.

New products, said Robert Hazlett, an analyst with SunTrust Robinson Humphrey, plays to Pfizer's strong suit. "What this company does well is bring products to market," he said in a telephone interview. "It is able to execute on the sales and marketing side."

Hazlett predicted sales of Pfizer's recently approved inhalable insulin and Sutent, a cancer drug, "will surpass some people." He also predicted Pfizer's "cost cutting will be well received," though the company has refused to disclose, so far at least, how many jobs have been eliminated and where.

New products must emerge from Pfizer's drug pipeline if the company is to replace blockbusters facing patent expiration by 2008, including the antidepressant Zoloft, allergy treatment Zyrtec and Norvasc, a blood pressure treatment that is Pfizer's No. 2 seller.

Jones Lang LaSalle


World Cities Are Our Future, Panelists Predict
February 08, 2006
By Amanda Marsh, Staff Writer

Joseph Brown
The future of the world is in cities, according to panelists at last night's "World City Insights" forum presented by Urban Land Institute New York. "Eighty percent of the population will live in cities," ULI president Richard Rosan said, noting that it will not just be mega cities of 1 to 5 million people, but also smaller ones of 500,000 to 1 million. The main focus of the forum was on the current and future world urbanization that will allow this to happen.

The panelists discussed the infrastructure, financing and sustainability of cities such as South Korea's New Songdo City, a $20-billion, 1,500-acre master plan city currently under development. Such cities will have connections to transportation, airports, bridges and highways, effectively connecting them to the world around them. They'll also have united business, educational, residential and cultural districts. "(World cities) eclipse boundaries…and shake the world physically and socially," EDAW president & CEO Joseph Brown (pictured) said.
Other important factors that contribute to cities' ultimate success include civil leadership, a vibrant public realm, adequate housing, economic mobility and restored urban ecosystems. "Without these qualities," Brown noted, "it's not a world city."

Besides Brown, forum panelists included moderator Ian Hawksworth of the Hongkong Land Co. Ltd., The Gale Company managing partner John Hynes, Lehman Brothers managing director Raymond Mikulich and Tishman Speyer Properties senior managing director Steven Wechsler.

Jones Lang LaSalle


Torto Predicts End to Cap-Rate Compression Era
February 08, 2006
By Suzann D. Silverman, Editor-in-Chief

Ray Torto
Ray Torto expects capital to continue to flow into the real estate markets, but he also sees repricing and an end to the cap-rate compression era. Such were the predictions of the Torto Wheaton Research principal & chief strategist during the morning general session yesterday at the Mortgage Bankers Association's Commercial Real Estate Finance/Multifamily Housing Convention & Expo in Orlando.

While MBA chief economist & senior vice president of research and business development Douglas Duncan, who also offered predictions during the session, has forecast only a couple more interest-rate hikes this year, Torto quoted a Federal Reserve statement from the end of January that he believes suggests the Fed will raise both the federal funds rate and the 10-year Treasury rate still further. That, in turn, could cause cap rates to rise despite demand for real estate product (and the loss of some of the more risk-averse newer investors).

But that does not mean calamity for the industry. Noting that the 20-year interest rate average is 6.4 percent and the 30-year average is 7.8 percent, he estimated that a rise of, say, 6.16 percent would cause cap rates to rise only slowly, by 40 to 100 basis points over the next four years.

Thus, cap rates would still be relatively low, which given strengthening fundamentals would allow owners to continue to have cash flow growth--although not enough to avoid the current era of high single-digit returns. Such a level of returns will force more and more investors to move up the risk spectrum in search of more opportunistic, and therefore better-returning, purchases.

Jones Lang LaSalle


Midtown office rents continued rise in January
by Julie Satow
February 08, 2006

The average asking rent in Midtown neared $60 a square foot in January, according to a report by Colliers ABR released Wednesday.

The average asking rent in Midtown neared $60 a square foot in January, according to a report by Colliers ABR released Wednesday.

The average asking rent in midtown for class A office space was $59.78 in January, up $0.14 from December. The rise coincides with a plummeting vacancy rate of 6.9% -- the lowest level since June 2001.

Asking rents downtown also saw a steep climb, boosted by the addition of 7 World Trade Center, the first office tower to be completed at Ground Zero. With asking rents at 7 WTC of around $50 a square foot, overall asking rents downtown rose to $39.62 a square foot, up 17.3% jump over December’s average.

The 1.6 million square feet of available space at 7 WTC boosted downtown vacancy rates to 12.3%, from 9.2% a month earlier. Despite the added availability of space from 7 WTC, net absorption in Manhattan was positive by just over 1 million square feet.
"Looking ahead, there is very little new construction that will be completed within the next year, thus if the economy keeps steaming along, the vacancy rate will quickly diminish… while rents climb ever higher," said Robert Sammons, the head of research at Colliers ABR and the author of the report.

Jones Lang LaSalle

GlaxoSmithKline posts 45% rise in fourth-quarter profit (GSK, UK:GSK)
By Steve Goldstein

LONDON (MarketWatch) -- GlaxoSmithKline (GSK) (UK:GSK) on Wednesday said fourth-quarter earnings rose 45% to 1.12 billion pounds ($1.34 billion), or 19.6 pence a share, with revenue up 8% to 5.91 billion pounds. Its 2005 earnings of 82p a share on revenue of 21.66 billion pounds each edged ahead of Thomson First Call-compiled analyst forecasts. For 2006, GlaxoSmithKline expects earnings per share to rise around 10% at constant currencies and expects to file for approval for its Cervarix cervical cancer vaccine before the end of the year in the U.S. and in Europe in the next few weeks. Glaxo shares rose 0.8% in a falling London market.

Jones Lang LaSalle

Siemens Corporate Research Inc. (SI)
755 College Road,
Princeton 08540
609-734-6500; fax, 609-734-6565.
Paul Camuti, CEO. www.scr.siemens.com

Siemens Medical Solutions (SI), 500 College Road East, Princeton 08540; 609-524-2133. www.usa.siemens.com/medical

Siemens outgrew its College Road building, says spokesperson Lujean Smith, and opened another 15-person laboratory across the street at 500 College Road, in the same building as State Street Corporation. Siemens medical researchers are working on health information technology and new imaging methods. (U.S. 1, September 17, 2003)

Sopherion Therapeutics Inc., 100 Overlook Center, Suite 100, Princeton 08540; 609-986-2022; fax, 609-986-2038. Ronald H. Goldfarb, CEO. Home page: www.sopherion.com
Sopherion Therapeutics, a privately held biotech focused on new therapies for advanced cancer, moved at the end of January from 100 Overlook Center, Suite 100, to larger quarters at 104 Carnegie Center. Based in New Haven, Sopherion was founded in 2001 and has 11 employees in its Princeton office.

Jones Lang LaSalle

PLOTS & PLOYS

Rebuilding Blueprints
February 8, 2006; Page B8

Much of New Orleans may be rebuilt from trailers in a Wal-Mart parking lot.

That, at least, is the hope of the folks who created a temporary blueprint room and design studio just west of the city in Kenner, La., that allows architects, engineers and construction workers to access plans to public rebuilding projects from schools to roads and sewers.

McGraw-Hill Construction, a construction-plan clearinghouse unit of McGraw-Hill Cos., set up the cluster of trailers to replace its Metairie, La., "plan room," which was badly damaged during Hurricane Katrina. Other companies also made donations: Autodesk Inc. and Hewlett-Packard Co. contributed hardware and design software, and Cisco Systems Inc. provided a solar-powered satellite Internet hookup. The setup allows displaced tradespeople, who previously worked from the plan room or from their own offices, to have a place to work.

Michael Calongne, a sales estimator for Louisiana Utilities Supply Co., has used the trailers since they opened in mid-December and expects to spend an increasing amount of time there. His company, a unit of Ferguson Enterprises Inc., itself owned by England-based Wolseley PLC, sells municipal water equipment and heating supplies.

Mr. Calongne searches the blueprints for equipment that his company sells, and sends quotes to the contractors bidding on the jobs. Fire hydrants and storm drains are in hot demand, he says. "A lot of the streets got messed up, and if the street gets messed up, the piping underneath gets messed up," he says. "They got a lot of those starting to show up versus a couple of weeks ago."

Ripe for Conversion

In the Manhattan real-estate market, rising values come to those who wait. These days, a former hotel on the seedy edges of Times Square that the Chinese government bought decades ago is viewed by some as a savvy real-estate play.

In October 1979, the Chinese government bought a 20-story former Sheraton Hotel at 520 12th Ave. for $6.9 million, or less than $20 a square foot, according to Santa Ana, Calif.-based real-estate data provider First American Real Estate Solutions. At the time, it seemed an odd location to host meetings of public officials, let alone diplomatic socials. While most consulates were located in the leafy neighborhoods circling the United Nations, the Chinese consulate was close to Times Square's notorious red-light district.

But in the decade since former Mayor Rudolph Giuliani launched a plan to clean up the neighborhood, a number of pricey real-estate developments and conversion projects have appeared along the 42nd Street corridor. Efforts to clean up the Hudson River waterfront, which the consulate fronts, have also helped.

Now, some Manhattan brokers are betting that the Chinese government may have a property ripe for residential conversion.

"What a great location in what's a burgeoning, up-and-coming residential area," says Chris Brodhead, a Massey Knakal Realty Services Inc. broker who handles building sales in the greater Times Square area. "This is a home run, real-estate-wise."

Chinese Consul Liyan Li says the government is unlikely to cash out and turn its now-valuable digs into luxury condominiums. "We didn't expect the prices to soar like that," says Mr. Li. "But we don't think we're going to sell the building."

Global REITs

Chinese Estates Holdings Ltd. says it is considering spinning off some of its property holdings into a new real-estate investment trust, joining the growing ranks of Hong Kong developers looking at REIT listings as a way to boost returns.

Chinese Estates, a midtier property developer controlled by Hong Kong businessmen Joseph Lau and his brother Thomas Lau, owns a number of major commercial and office buildings in Hong Kong's Causeway Bay shopping district -- an area that commands some of the highest rents in the city.

The company said options it is considering include "the possibility of disposing of certain investment properties of the group in Hong Kong to a real-estate investment trust and the possible listing of the units of the real-estate investment trust on the stock exchange." No final decision has been made on the REIT, Chinese Estates noted.

Jones Lang LaSalle

BLUEPRINT
Hartford
Employment Levels Hurt Office Sector
February 8, 2006; Page B8

Hartford, Conn., has built a reputation as a global insurance capital since 1810, with the formation of Hartford Fire Insurance Co. The company, now part of Hartford Financial Services Group Inc., issued a policy covering Abraham Lincoln's Illinois home before he left for the White House. Other Hartford-based insurers have their own claims to fame: Aetna Inc., for instance, insured the lives of the first seven American astronauts in 1963.

In recent years, Hartford's weak economy, along with mergers, acquisitions and cost-cutting in the mature insurance and financial sectors, has chipped away at employment levels, and that trend has held back demand for office space. The office sector has been the weakest performer in the local commercial real-estate market, which is lagging behind much of the country despite recent improvements.

Hartford's office, retail, apartment and warehouse vacancies were all above the national averages in the fourth quarter and rents were below average, though all of these indicators, with the exception of office rents and retail economic vacancies, are strengthening or flat, according to Property & Portfolio Research Inc., a Boston-based real-estate research firm. Office-building values were anemic compared with other markets in the pricey Northeast, according to Real Capital Analytics Inc. in New York. Average sale prices rose 44% last year to $108 a square foot from $75 in 2004, though they remained well below the national average of $190 and far below the Northeast's average of $264, according to Real Capital.

In 2004, the area's economy started to pick up, driven by gains in the professional and business-services sectors and education and health fields. Overall employment rose 0.6% in December from a year earlier, less than half the national growth rate of 1.5%, according to the Bureau of Labor Statistics. Still, insurance-industry employment in the Hartford area fell by about 2,500 jobs in December compared with December 2000. As recently as July, MetLife Inc.'s acquisition of Citigroup's Travelers Life & Annuity resulted in more than 400 job cuts in the area, though some companies, such as Hartford Financial, have expanded their greater Hartford work forces in recent years.

Some investors are encouraged by signs of revitalization in downtown Hartford. The new Connecticut Convention Center opened last year, and since 2002, about 1,250 new residential units have been built, 900 are under construction, and almost 1,000 more are planned for the city, according to a spokeswoman for Hartford Mayor Eddie Perez.

The projects include a 36-story, 262-unit luxury rental tower under construction by Northland Investment Co. of Newton, Mass., which owns about 4.5 million square feet of property in the region. Lawrence R. Gottesdiener, Northland's chief executive, believes Hartford has the long-term potential to be a "mini Boston." Its location, high construction costs that keep new supply in check and a corporate culture with strong roots will ultimately boost the region's real-estate values, he said. A higher density downtown also will make Hartford a more vital place to live, shop and work.

"You don't need explosive growth like in the Sunbelt to get a pop in values," said Mr. Gottesdiener. "Incremental growth coupled with barriers to entry [for new construction] will do the trick."

Retail has been one of the region's stronger sectors, helped by above-average household incomes, according to PPR. Though the area's population of about 1.2 million is growing at a below-average rate, Hartford's ability to draw consumers from neighboring big cities was one factor that led Cabela's Inc. to enter talks to build a superstore on a portion of a planned 624-acre mixed-use development in East Hartford, said James Powell, a spokesman for the Sidney, Neb., sporting-gear retailer.

Jones Lang LaSalle

February 8, 2006
Square Feet
A Long Island City Awakening
By JOHN HOLUSHA

Midtown Manhattan is closer to Long Island City than it is to downtown Manhattan, and the transportation links are excellent. All this has made the area particularly attractive to deep-pocketed developers of residential projects, like Rockrose and AvalonBay, and they and other builders have a number of projects under way to house people who cannot afford Manhattan prices or decline to pay them.

As a result, the prospective influx of people to what had been an industrial area seems likely to attract retailers and other service companies. But will office developers and business tenants be attracted to what has long been designated as New York City's fourth central business district, after Midtown, downtown Manhattan and downtown Brooklyn?

Opinions vary. Some office projects have been developed, and others are being planned. But despite high rents and a shortage of prime space in Midtown, office tenants are not clamoring for sites in Long Island City, real estate professionals say, and developers are reluctant to build without an anchor tenant.

"The East Side of Manhattan is one subway stop away from the Citicorp building" in Long Island City, said Christopher Jones of the Regional Plan Association, a nonpartisan research group. "That is closer than the West Side. But the East River remains a physical and psychological barrier."

The Citicorp tower, also known as Court Square One, is a 48-story, 1.4-million-square-foot office building that opened in 1989.

Mr. Jones said that government-aided efforts to revive downtown Manhattan in the wake of the attack of Sept. 11 may delay efforts to develop a commercial core in Long Island City, despite favorable zoning changes intended to encourage high-rise development.

"There is some potential tension between downtown and Long Island City," Mr. Jones said. "But over all, Long Island City caters to a different market than downtown, and it is on a different time scale" in that there is a sense of urgency to redevelop Lower Manhattan relatively quickly.

Residential development is starting to transform Long Island City, argued Sanford Zuckerbrot, chairman of Sholom & Zuckerbrot, a brokerage firm with headquarters in the area. "Until recently, we had only local developers in the area. Now, we have had an influx of big-time developers — Manhattan developers who were not associated with Queens."

He said Rockrose was planning to build seven residential buildings that would house 3,200 to 3,300 condominium units, along with other residential developments. "Now we are having long-term development, like Jersey City," where major projects have been built in several stages, Mr. Zuckerbrot said.

Some industrial buildings, like the Eagle Electric factory near the Citicorp high-rise, are being converted into residences. But Mr. Zuckerbrot said some operations, like printers, were still viable and were needed to service businesses in Manhattan.

He said the remaining industrial companies could co-exist with newer residential development in separate zones, as they do in Brooklyn in neighborhoods like Williamsburg and Greenpoint.
Some commercial projects have already happened. To house up to 2,000 MetLife workers transferred out of Manhattan, Brause Realty converted and added to an old factory facing the Queensboro Bridge. Construction is under way near the Citicorp tower for a 16-story, 270,000-square-foot building that will house the United Nations Federal Credit Union and other commercial tenants. It is called Court Square Two.

But other projects remain stalled. Tishman Speyer's plan for a major office tower in Queens Plaza has not attracted a major tenant so far. "The site is all zoned and ready to go for as much as 3.5 million square feet, but they will not build without a tenant," said John Reinertsen, a specialist in Queens properties for CB Richard Ellis, a Manhattan-based brokerage and services company.

Mr. Reinertsen said a growing residential population might help to spur the development of commercial properties, but he added that for now areas zoned as residential would be the first to be developed. "The value of land that is zoned for residential is three times more than for commercial," he said.

The residential and commercial markets are really not linked in Long Island City, unlike in some other areas where there are mixed-use projects with offices, stores and housing, said John Maltz, the president of Greiner-Maltz, a brokerage firm focusing on Queens, Brooklyn and Long Island. The projects that have taken place, like the MetLife development or the United Nations Credit Union, have been driven by a single major tenant.

Most developers, he said, have no stomach to put up speculative office buildings in hopes of filling them with multiple tenants. "There is land available along Jackson Avenue" that is zoned for high-density commercial development, he said, "but nobody is going into the ground."
Nevertheless, when the Reckson Associates Realty Corporation, a real estate investment trust, acquired the Citicorp building and recapitalized it last fall, the company noted the potential of the area.

Scott Rechler, the president of Reckson, said Long Island City was "one of the last remaining underdeveloped New York City submarkets."


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Jones Lang LaSalle


U. affirms College Town
Vice president addresses students on revitalization of Livingston
By Stephanie Guzowski/Correspondent
Published: 2/8/06Article

Media Credit: Onnie Koski/Targum Senior Staff Photographer
The current plans for College Town on Livingston campus would take up underused land that is presently part of the Ecological Preserve, above.

After seeing the immense amount of attention paid to the College Avenue Greening project, Adam Tamzoke, the external vice president of the Livingston College Governing Association, wonders about the status of proposals to revitalize the Livingston campus.

The plans include the proposal for College Town, a complex slated to occupy a 44-acre tract of University land adjacent to Livingston, according to the project's Web site.Karen Kavanagh, the executive vice president of administrative affairs, was on hand at Monday's meeting to address students' concerns about College Town's status. The University, she said, has issued preliminary reports regarding College Town, and has hired a real estate advisor to conduct a study on the project's financial feasibility. "Initial recommendations are supposed to come in at the end of February and at that point we will discuss those findings with you," Kavanagh said to those in attendance at the meeting.

Kavanagh maintained that the University is not neglecting the project. Rather, she assured, "we have been actively pursuing this."Tamzoke, a Livingston College sophomore, reports, "A lot of Livingston students feel the attention has been shifted away from [Livingston].

"For example, at LCGA meetings last semester, concerned students discussed a lack of efforts to update the numerous facilities that they regarded as outdated, such as the student center, dining hall and some residence halls. To students who shared Tamzoke's concern about the low degree of promotion College Town has received compared with the publicity surrounding the College Avenue Greening project, Kavanagh explained the latter depends heavily upon private donations."We need donor support there," Kavanagh said, adding, "Publicity equals donor participation.""[At Livingston], we are going to look at developers to help us.

We're going to look at leasing land, we're going to look at bonding in order to build the student center," Kavanagh said.The College Avenue Greening project requires the University to raise money, while the building of a new student center on the Livingston campus would require more committed money."Any of the money we use for enhancements for student centers or recreation centers or dining halls comes from student structure and bonding," she said.Kavanagh also said enlisting the help of private donors to help with such a project would not be feasible."The problem is student centers are not a high priority for donors," Kavanagh said. "They're just not."Internal Vice President Samantha Soren, a Livingston College junior, reported she thinks the LCGA still has "a lot of unanswered questions."

Jones Lang LaSalle


Mayor stresses redevelopment
By Catherine Galioto-Snipe/Acting News Editor
Published: 2/8/

Through the windows of the Catherine Lombardi Italian-American restaurant came heavy symbolism from New Brunswick Mayor James Cahill's State of the City address.

The restaurant, a member of the city's Urban Enterprise Zone, shows the successes of its special 3 percent tax rate and employment initiatives, Cahill said.

As he spoke, the view behind Cahill encompassed the rising concrete skeleton of Heldrich Plaza.

"The 11-story $110 million Heldrich Project is one of our state's most ambitious and significant mixed-use development in decades," Cahill said.

Sitting at the crossroads of Livingston Avenue and New Street, planners and city officials hope Heldrich Plaza will emerge as a major hub of city activity.

The construction began with a 2003 groundbreaking and is slated for completion in early 2007.

The structure will encompass the new John J. Heldrich Center for Workforce Development, as well as luxury condominiums, classroom and office space, street level retail space and a deluxe hotel, spa and conference center, according to its planner, the New Brunswick Development Corporation.

Adding to the UEZ and moving forward on redevelopment projects were the two cornerstones of Cahill's speech, which also addressed property taxes, primary education and the Route 18 construction.

Taking further inspiration from his restaurant surroundings, Cahill laced his speech with culinary puns that brought laughter from an eatery packed with city and county officials, citizens groups and press.

Cahill called steps taken from last year to the present part of a "recipe for success," despite controversy over some of the more aggressive parts of the College Avenue redesign.

Devco is also proposing a Gateway Project for Somerset and Easton Avenues.The plan is to build a 330-foot tower as part of a new initiative to improve the physical appearance of the College Avenue campus.

It is one of several million-dollar initiatives planned between the city and the University.

New Jersey Books owner Ed Mueller - whose property is also slated for redevelopment - filed suit against the city this fall claiming the plan is a violation of his ownership rights.

The mayor also pushed plans for the Health Sciences Center, which will include two buildings to be constructed between Paterson and Bayard streets.

One building would include the Institute for Health and clinic space for the Graduate School of Applied and Professional Psychology. The other building would be home to the New Brunswick campus' College of Nursing. It would also include clinic space for the Ernest Mario School of Pharmacy.

These are not the only partnerships between city and University, Cahill said."With an ambitious mix of ingredients including academic, residential and mass transit improvement, our city - in partnership with Rutgers- will work together to begin creating a long-term mutually beneficial revitalization of the College Avenue community and New Brunswick's 5th and 6th wards," Cahill said.

Another project Cahill spoke of is the Public Safety Building, which will move the Rutgers University Police Department from the end of George Street to the center of it, on the corner of Commercial Avenue.

Besides collaborative initiatives with the University, the city is looking to get the Handy street area a supermarket and improve housing throughout the city. Housing improvement efforts include a partnership with Mount Zion African Methodist Episcopal Church and Leewood Real Estate Group of Trenton for a townhouse community in the Remsen Avenue neighborhood.

Along New Street, new condominium and rental space will emerge through the Metropolitan - one of several mixed use projects that blend housing with retail and parking components.

Another is Raritan Heights, near the Loews movie theater, which also includes transportation changes that will remove the lengthy U-turn to get to the theater.

Despite being shut down for investigation, the dredging of the Raritan River is back on track, Cahill said.

These and other multi-million dollar projects add up to more than $300 million in redevelopment projects spanning several wards of the city.

Cahill emphasized the use of UEZ and federal and state grants to offset new projects as well as ongoing ones. Through UEZ, money raised by the lower tax rate is earmarked by the state to pay for city projects, instead of combining it with the rest of the state's revenue.

It also rewards UEZ businesses for employing New Brunswick residents.City spokesman Bill Bray said the long list of projects exists because city officials will not rest on their laurels."How can you have too much employment, too much achievement?" Bray said.

However, the city government may face a major hurdle in the state budget deficit. State funding to the city may be at risk, Cahill said.

New Brunswick may face tough choices and have to exercise fiscal prudence, Cahill said, but he still hopes to address property tax issues.

City property taxes increased last year but by the third lowest increase in the county."I remain firmly committed to lessening the burden to our property taxpayers again this year," Cahill said.

Through the windows of the Catherine Lombardi Italian-American restaurant came heavy symbolism from New Brunswick Mayor James Cahill's State of the City address.The restaurant, a member of the city's Urban Enterprise Zone, shows the successes of its special 3 percent tax rate and employment initiatives, Cahill said.

As he spoke, the view behind Cahill encompassed the rising concrete skeleton of Heldrich Plaza."The 11-story $110 million Heldrich Project is one of our state's most ambitious and significant mixed-use development in decades," Cahill said.

Sitting at the crossroads of Livingston Avenue and New Street, planners and city officials hope Heldrich Plaza will emerge as a major hub of city activity.

The construction began with a 2003 groundbreaking and is slated for completion in early 2007.The structure will encompass the new John J. Heldrich Center for Workforce Development, as well as luxury condominiums, classroom and office space, street level retail space and a deluxe hotel, spa and conference center, according to its planner, the New Brunswick Development Corporation.

Adding to the UEZ and moving forward on redevelopment projects were the two cornerstones of Cahill's speech, which also addressed property taxes, primary education and the Route 18 construction.Taking further inspiration from his restaurant surroundings, Cahill laced his speech with culinary puns that brought laughter from an eatery packed with city and county officials, citizens groups and press.

Cahill called steps taken from last year to the present part of a "recipe for success," despite controversy over some of the more aggressive parts of the College Avenue redesign.

Devco is also proposing a Gateway Project for Somerset and Easton Avenues.The plan is to build a 330-foot tower as part of a new initiative to improve the physical appearance of the College Avenue campus.It is one of several million-dollar initiatives planned between the city and the University.

New Jersey Books owner Ed Mueller - whose property is also slated for redevelopment - filed suit against the city this fall claiming the plan is a violation of his ownership rights.

The mayor also pushed plans for the Health Sciences Center, which will include two buildings to be constructed between Paterson and Bayard streets. One building would include the Institute for Health and clinic space for the Graduate School of Applied and Professional Psychology. The other building would be home to the New Brunswick campus' College of Nursing. It would also include clinic space for the Ernest Mario School of Pharmacy.

These are not the only partnerships between city and University, Cahill said."With an ambitious mix of ingredients including academic, residential and mass transit improvement, our city - in partnership with Rutgers- will work together to begin creating a long-term mutually beneficial revitalization of the College Avenue community and New Brunswick's 5th and 6th wards," Cahill said.

Another project Cahill spoke of is the Public Safety Building, which will move the Rutgers University Police Department from the end of George Street to the center of it, on the corner of Commercial Avenue.

Besides collaborative initiatives with the University, the city is looking to get the Handy street area a supermarket and improve housing throughout the city. Housing improvement efforts include a partnership with Mount Zion African Methodist Episcopal Church and Leewood Real Estate Group of Trenton for a townhouse community in the Remsen Avenue neighborhood.

Along New Street, new condominium and rental space will emerge through the Metropolitan - one of several mixed use projects that blend housing with retail and parking components.

Another is Raritan Heights, near the Loews movie theater, which also includes transportation changes that will remove the lengthy U-turn to get to the theater.Despite being shut down for investigation, the dredging of the Raritan River is back on track, Cahill said.

These and other multi-million dollar projects add up to more than $300 million in redevelopment projects spanning several wards of the city.

Cahill emphasized the use of UEZ and federal and state grants to offset new projects as well as ongoing ones. Through UEZ, money raised by the lower tax rate is earmarked by the state to pay for city projects, instead of combining it with the rest of the state's revenue.

It also rewards UEZ businesses for employing New Brunswick residents.City spokesman Bill Bray said the long list of projects exists because city officials will not rest on their laurels."How can you have too much employment, too much achievement?" Bray said.

However, the city government may face a major hurdle in the state budget deficit. State funding to the city may be at risk, Cahill said.

New Brunswick may face tough choices and have to exercise fiscal prudence, Cahill said, but he still hopes to address property tax issues.City property taxes increased last year but by the third lowest increase in the county."I remain firmly committed to lessening the burden to our property taxpayers again this year," Cahill said.

Jones Lang LaSalle


Pfizer Explores Options for OTC Drug Unit
By THE ASSOCIATED PRESS
Filed at 12:08 a.m. ET

NEW YORK (AP) -- Pfizer Inc. said Tuesday it is exploring various options for its nearly $4 billion over-the-counter drug unit, including selling or spinning off the business which includes Listerine mouth wash, Visine eye drops and Lubriderm skin lotion.

The move comes as Pfizer struggles to improve its sales and earnings in the wake of patent losses on several important drugs, sluggish sales of key medicines and an overall more competitive marketplace. Analysts surveyed by Thomson Financial expect only 1 percent earnings growth this year.

Among potential suitors for the array of brands are Procter & Gamble Co. and Colgate-Palmolive Co., said Crowell, Weedon & Co. analyst Doug Christopher. He said another possible bidder could be Madison, N.J.-based Wyeth, which also has a portfolio of over-the-counter brands including Advil pain relievers, Dimetapp cough syrup and Centrum multivitamins.
Christopher said shares of high-profile consumer brand companies trade at three to four times earning and that he would expect Pfizer's brands to fetch around three times earnings, or about $10 billion to $12 billion.

Pfizer said it will discuss its alternatives for the consumer business, which include retaining it, when it meets with analysts and investors on Friday to provide earnings guidance and a business overview. Last April, Pfizer told Wall Street it would have double-digit earnings growth this year but rescinded the guidance six months later, citing slowing prescription growth and a competitive marketplace.

In a statement, Pfizer said it wants to ''unlock the value of the business for Pfizer shareholders at a time when market valuations are attractive for large, high-quality consumer businesses.''
Bert Hazlett, an analyst at Suntrust Robinson Humphrey, viewed the announcement as a positive.

''It is heartening that it (Pfizer) is considering multiple strategic option to improve its overall business,'' Hazlett said.

It also makes sense for Pfizer to redeploy the money and energy it puts into the consumer business into higher growth opportunities, he said.

Sales of the consumer business, which also includes Luden's cough drops and Bendadryl products for colds, sinus and allergies, rose 10 percent to $3.9 billion last year. The business accounts for 7.5 percent of Pfizer's $51 billion in yearly revenues. Pfizer spokesman Paul Fitzhenry said the business had a pretax profit of $667 million in 2004, but that last year's results weren't yet available. However, over-the-counter medicines have lower margins than prescription drugs.

Fitzhenry said nine of the group's brands have over $100 million in revenue, and employ 3,500 people globally.

This is the first time in three years that Pfizer has taken a major step toward divesting itself of a noncore business. Between 2002 and 2003, Pfizer sold its Adams confectionery business, Schick-Wilkinson Sword razor blade operation and Tetra aquarium supplies, all of which were acquired when it purchased Warner-Lambert in 2000.

Pfizer isn't alone in shedding consumer products. Last year, Bristol-Myers Squibb Co. sold its U.S. and Canadian consumer medicines business to Novartis AG for $660 million in cash. In 2002, Bristol-Myers sold its line of Clairol hair care products.

Pfizer also makes a line of prescription drugs and vaccines for animals. Sales for those products rose 13 percent to $2.2 billion last year.

Pfizer shares rose 9 cents to close at $25.18 in trading on the New York Stock Exchange, before news of the possible sale was released. The stock gained another 34 cents, or 1.4 percent, in late-session activity.

Jones Lang LaSalle

MediaBay Hires Merchant Bank to Tap Strategic Partners

MediaBay (Nasdaq: MBAY) in Cedar Knolls has retained merchant bank MediaTech Capital Partners to help it plan its next move.

"To accelerate the company's distribution in the global wireless marketplace our board of directors has authorized management to implement an acquisition program," said Jeff Dittus, CEO. "As part of this strategy, the company will also evaluate seeking strategic partners that can assist with this strategy and lower our execution risk."

MediaBay produces spoken-word audio collections like audio books and radio programs. The company wants to speed up the distribution of its content to wireless markets in a bid to piggyback on the popularity of mobile phones with entertainment functions like video and music playback.

The company’s audio collections are currently available online for downloading. Shares of MediaBay were up $0.02 to $0.92 in morning trading. - Joao-Pierre Ruth

Jones Lang LaSalle


Akzo profit doubles, plans pharma IPO
Shares add nearly 7% on IPO, though margins disappoint

By Simon Kennedy, MarketWatchLast Update: 10:15 AM ET Feb. 7, 2006
LONDON (MarketWatch) -- Chemicals giant Akzo Nobel said Tuesday its quarterly income more than doubled and detailed plans to spin off its pharmaceuticals division in an initial public offering.

Fourth-quarter net income rose to 317 million euros from 153 million euros a year earlier. Revenue in the quarter climbed 7% to 3.31 billion euros, topping analyst forecasts.

But the results aren't as good as they first appear, said Jan de Cauter, an analyst at Delta Lloyd Securities.

"In spite of what might look as positive news, a major part of the result comes from one-off items," he noted. "Margins in all divisions decreased, mainly due to higher raw-material prices."

BRL68.96, +1.46, +2.2%) and the release of 283 million euros from ending a post-retirement health-care scheme.

AKZOY51.10, +3.64, +7.7%) (NL:00913: news, chart, profile) climbed 6.5% in Amsterdam, which de Cauter attributed to the IPO announcement. The Dutch firm is the world's largest maker of chemical coatings.

The company said it will start with a minority IPO of its pharmaceuticals arm, to be called Organon Biosciences, on the Euronext exchange in Amsterdam. The timing of the issue will depend on developments in Organon's pipeline of new products. Full separation of the business will take a further two to three years, Akzo said.

A final decision on the timing and details of the listing will be taken in the second half of the year.
"Over recent years, we have made significant progress related to our strategy of fixing pharma, refocusing our chemicals portfolio and continuing to grow and invest in our coatings business," said CEO Hans Wijers.

"As a logical next step, and after a thorough strategic review, we believe that creating two independent companies...will enhance shareholder value through both increased management and strategic focus, and greater transparency."

"What we have done in the last couple of years is basically preparing for this move," Wijers told a press conference.

Wijers said the new company, which will also include Akzo's animal healthcare business, will be headed by Toon Wilderbeek, the board member responsible for pharmaceuticals.

Wijers declined to speculate on the size of the IPO. An analyst at a sell-side firm said, based on annual sales of 3.5 billion euros at the divisions to be spun off, he would expect the new company to be valued at roughly 5.5 billion euros. He noted, since it will be a minority IPO, the issued shares will be worth possibly about 30% of this figure.

Going back to the quarterly figures, Akzo said operating income fell across all divisions.
In its pharmaceuticals division, operating income dipped 3% to 84 million euros.

"The decline is due to the fact that we have a very full pipeline, which of course drives a lot of costs to research and development and marketing and sales," said Wijers.

In the coatings division, operating income dropped 19% to 42 million euros.

"We had a very, very tough year in coatings. There were unprecedented hikes in raw-material costs," said Wijers. But he noted the market has improved since the first half of the year.

Akzo said it will continue with its policy of disciplined balance-sheet management.
"Options for shareholder value creation, such as a share buyback program, are evaluated against investments and acquisitions for growth," the company noted.

Wijers said the company's balance sheet is getting stronger, but noted many companies in the pharmaceutical sector maintain a strong balance sheet.

"Don't forget we still have a net debt of 1.5 billion euros," he added.

Jones Lang LaSalle


Hooper Holmes expects a loss and kills dividend
Tuesday, February 07, 2006
BY JOSEPH R. PERONE
Star-Ledger Staff

Hooper Holmes, the troubled insurance services firm, forecast a loss for 2005, omitted its dividend and said an executive vice president had left the company.

Hooper expects to lose 3 cents to 6 cents a share for 2005, which would include about $1.9 million in charges, according to a news release yesterday. The Basking Ridge company, which provides blood and urine testing to screen people who are seeking insurance policies, previously forecast it would earn 7 cents to 9 cents a share for the year.

The company also lowered its sales guidance for the year to between $315 million and $320 million. The new guidance is $5 million to $10 million lower than previous forecasts. The company also plans to take a "material impairment charge" in the fourth quarter.

The company declined to elaborate. Analysts who follow the company were not available for comment.

Hooper said it lowered expectations, in part, because fewer people are applying for life insurance in the United Kingdom, and because of higher costs. As a result, the company's Medicals Direct Group will report annual sales that are $1.5 million lower than expected.

Another unit, Heritage Labs, is expected to have a $900,000 shortfall in revenue because it is "testing a lower than expected number of specimens," according to the company.

"We are now undertaking a thorough and active review of the entire business," Chief Executive James Calver said in a statement.

"I joined Hooper Holmes in January of this year because I believe the company has a good base of products and clients and excellent long-term opportunities for growth. I look forward to setting out plans for repositioning the company, including aligning our infrastructure and revenue base, over the coming months."

During a brief telephone interview yesterday, Calver said he would lay out the company's strategic plans during an analyst conference call March 1. Despite the gloomy outlook, the former Mellon Financial and General Electric executive said he expects the company will be successful in re-engineering itself.

"We have been a leading provider of outsourced medical services for the insurance industry for 107 years," said Calver, who joined the company four weeks ago. "There is no doubt that we have a long history of delivering high-quality services. But our clients continue to ask more of us."

How Hooper will meet those needs remains to be seen. The board of directors voted last Friday to suspend the company's annual dividend of 6 cents a share. Companies often cut or eliminate their dividends to conserve cash during a financial crisis.

Hooper also said Daniel Ross has resigned as executive vice president of the company's Claims Evaluation Division. Calver said John Spenser, chief operating officer, will assume the additional duties of managing that division.

"We're very much a growth-oriented company, and John has a long history of growing companies," Calver said.

The company's lower earnings guidance also reflects about $2.1 million in selling, general and administrative costs that were not anticipated when it made projections for the year last October. The company also expects to incur $1.9 million in severance and restructuring charges, executive relocation expenses and the write-off of some business application software.

The executive suite at Hooper has been in turmoil during the past several months.

Last August, Fred Lash resigned as chief financial officer nearly a year after he questioned whether former Chief Executive James McNamee should have been reimbursed for some charitable contributions and expenses.

McNamee was cleared of any wrongdoing by the board's audit committee last fall. However, McNamee reimbursed the company for $23,000 in expenses after the committee determined they had no business purpose.

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Jones Lang LaSalle

Edgewater faces suit over sports complex
Tuesday, February 7, 2006
By ADRIENNE LUSTAFF WRITER

A Fort Lee resident who hopes to build tennis, boccie and volleyball courts atop a Superfund site in Edgewater has sued the borough, seeking to overturn the zoning board's denial of the plan.

Mitchell Meyer, an avid tennis player, sought a use variance to build a sports complex on the Quanta Resources Superfund site on River Road. The land is zoned for offices and research but has been regarded as an eyesore for decades.

The complaint was filed in Superior Court in Hackensack on Dec. 19, and is scheduled for a case management hearing today before Judge Jonathan N. Harris.

Neither Meyer nor his lawyer, Joseph Mariniello Sr., could be reached for comment, but Mariniello previously said his client intended the project as an interim use, to be constructed before the full Superfund cleanup was completed.

Edgewater's zoning board voted twice on the application. In September, the board voted 4-2 in favor of the variance, with one abstention, but the measure failed because such variances require five affirmative votes to pass.

Meyer appealed the decision and was granted a second vote, in October. A zoning board member who previously abstained voted in favor, but another board member changed his vote to "no," so the measure failed again.

Mariniello, who previously served as the zoning board attorney for Edgewater, argues in the complaint that the first vote "should have been considered a sufficient affirmative vote and approval of plaintiff's application."

Meyer is also seeking to recover lawyer's fees and the costs of the suit.

Mariniello argues in the complaint that the second vote should not count because the board "considered evidence outside the scope of the record before it, issues that were non-zoning issues."

Neither Dennis Oury, the zoning board's designated lawyer, nor Scott Sproviero, the lawyer who typically stands in for Oury at the meetings, returned calls for comment.

Robert Regan, Edgewater's municipal attorney, and Barbara Rae, the borough clerk, said they were not aware of the lawsuit and that they had not been served.

The Quanta Resources site, at 163 River Road, was previously home to a tar-processing plant and an oil-recycling facility. Among the contaminants that have been found at the site are polychlorinated biphenyls, or PCBs, arsenic, chromium, lead, coal tar and creosote.

Mitchell has contended that most of the dangerous substances were removed in previous cleanups, and that his proposed sports facility would not present any health hazards. The EPA is still working on the cleanup of the site.

E-mail: lu@northjersey.com