This is a company blog used by the New Jersey Jones Lang LaSalle Team to keep track of current events within the real estate sector. All items posted on this website are originally written by other authors from various sources. This is simply used as a searchable tracking system for news we found relevant to our business.
Strong payrolls expected again in Feb. Survey sees 206,000 growth in U.S. jobs By Rex Nutting, MarketWatch Last Update: 5:08 PM ET Mar 9, 2006
WASHINGTON (MarketWatch) -- All the signs point to strong job growth in February, economists surveyed by MarketWatch said.
The Labor Department will report on February nonfarm payrolls on Friday at 8:30 a.m. Eastern time.
Economists surveyed by MarketWatch are forecasting an average gain of 206,000 in payrolls and expect the unemployment rate to remain at 4.7%. Average hourly earnings should rise 0.3% and the average workweek should stay at 33.8 hours, the survey says.
The economy added 193,000 jobs in January, with payrolls boosted by unseasonably warm weather in much of the nation that kept construction workers and others who work out-of-doors on the job longer.
Most economists expect some payback in February, when the weather returned to more seasonable cold and wet conditions. But they say fundamental strength in the labor market probably offset any expected seasonally adjusted declines from the weather.
Financial markets will be paying close attention to the details of the report for hints about what the Federal Reserve will do about interest rates. See our complete coverage of the Fed. "This report will play an important role in setting the tone at the March 27-28 [Federal Open Market Committee] meeting -- particularly since the Fed has recently been emphasizing its data-dependent stance on monetary policy," said Joseph LaVorgna, chief U.S. fixed income economist for Deutsche Bank.
A rate hike at the March meeting seems to be a foregone conclusion, but the decision in May could be influenced by the March and April payroll reports. The FOMC said in January that "possible increases in resource utilization" had the potential to add to inflationary pressures. With the unemployment rate at a five-year low of 4.7%, the Fed is concerned that the tight labor markets could set off a spiral of wage and price increases.
The biggest evidence in favor of a strong payrolls report is the low level of jobless claims during the month. Initial jobless claims dropped to a new plateau just under 300,000 per week for seven straight weeks, while continuing claims fell to a five-year low.
Leading indicators, such as jobless claims, the manpower survey and the purchasing managers' indexes, point to payroll growth of as much as 300,000, said Drew Matus, an economist for Lehman Bros. But the weather effect will knock the gain back to about 250,000. he said.
Other economists say the payrolls report will look weak. "There will be a payback," said Jim O'Sullivan, U.S. economist for UBS, who's predicting growth of 125,000.
David Greenlaw, an economist for Morgan Stanley, is forecasting a gain of only 100,000 because of unseasonably bad weather in February. "A major blizzard battered the East Coast just as the survey week was about to begin," Greenlaw said.
A stronger storm with similar timing in January 1996 played havoc with the payroll figures then and Greenlaw expects a similar although smaller impact for this year's storm.
Others say the blizzard was a non-event for payrolls. It hit early in the survey week and was followed by very warm weather than melted the snow in days, which means very few workers would have been kept from work the whole week.
To be counted as off the payroll or unemployed, a worker would need to miss the entire week of work during the week of Feb. 12.
One place the East Coast storm could have an impact is on the average workweek, which could fall by a tenth of an hour to 33.7 hours, Matus said.
A reduced workweek could also boost average hourly earnings, because many workers get paid for a full week even if they miss some time on the clock.
Average hourly wages are up 3.3% in the past 12 months, the most in two years. But after adjusting for inflation, real hourly wages are down 0.7% in the past year. Rex Nutting is Washington bureau chief of MarketWatch.
posted by Jones Lang LaSalle NJ News Blog at 3:01 PM
Warehouses begin to transform brownfield site Home News Tribune Online 03/10/06 By ARIELLE LEVIN BECKER STAFF WRITER abecker@thnt.com
WOODBRIDGE — Plans for a multimillion-square-foot warehouse complex on the Port Reading/Carteret boundary are moving forward, with one warehouse already on the market in Carteret and eight more planned in Port Reading.
The project would transform a now-vacant brownfield site into a major warehouse-distribution complex and extend Carteret's Industrial Avenue into Woodbridge, allowing truck traffic from the New Jersey Turnpike to bypass local roads.
Last month, the Woodbridge Planning Board granted final site-plan approval to build 3.2 million-square-feet of warehouse space on the site.
The plans include eight warehouse-style buildings on the Port Reading side of the 290-acre tract.
The company is hoping to begin construction on three buildings there by the end of the year, said Kevin Matzke, a senior vice president for ProLogis, the parent company of the site's owner, Port Reading Woodbridge LLC.
ProLogis acquired the site after merging with the company that previously owned it, Catellus Development Corp., last year.
The former brownfield site in Port Reading is undergoing remediation work to prepare it for building, Matzke said.
The Industrial Road extension could be completed by the end of the year and open in the second quarter of 2007, Matzke said.
On the Carteret side, meanwhile, a 360,000-square-foot warehouse-distribution facility has already been completed and remains on the market for potential tenants. Matzke said the company hopes to have a tenant by the end of the year.
The development is taking place on land previously owned by Public Service Electric & Gas in Woodbridge and StayFlex in Carteret.
Seven Nursing Homes Trade for $100M By Eric Peterson Last updated: March 10, 2006 09:04am
MT. LAUREL, NJ-Retirement Residences REIT, a Mississauga, ON-based company that specializes in retirement and nursing care properties, is under contract to acquire seven skilled nursing facilities in New Jersey. The agreed price for the seven properties, which total 1,169 beds, is $100 million. Locally based Brandywine Senior Care Inc. is the seller.
“The agreement to buy this portfolio comes after several months of negotiation and consideration by our board of trustees,” says Derek Watchorn, president/CEO of Retirement REIT. “The acquisition will add seven quality facilities with strong market presence to our existing portfolio of three skilled nursing facilities in New Jersey.”
Those three facilities are located in Bloomfield, Passaic and Wayne, all in the northern part of the state. The seven facilities being acquired will extend Retirement REIT’s presence to the central and southern parts of New Jersey--they’re in Toms River, Brick, Linwood, Williamstown, Neptune, Whiting and Somerset.
“We had previously identified New Jersey as a desirable market because of its strong demographics and income levels, favorable funding environment and controls on new construction,” Watchorn says. “This acquisition allows us to expand our existing platform in the northeastern US. It is also consistent will our commitment to enhance value for unitholders while we continue to look at strategic alternatives because the transaction is expected to be accretive to both per unit distributable income and AFFO.”
For Brandywine, the sale essentially takes the company out of the nursing home business, but it will continue to operate a string of assisted-care retirement communities. Under the terms of the agreement released by both companies, Retirement REIT will assume the existing mortgages on the properties, totaling approximately $62 million and bearing a weighted average interest rate of 7.5%. The buyer will also arrange a new mortgage on an unencumbered facility amounting to about $11 million, and will pay the balance in cash. The deal is expected to close this spring, pending lender and government regulatory approval.
Retirement REIT currently owns 216 retirement and long-term care facilities, 33 of them in the US and the rest in Canada. It also manages 10 properties for other owners.
posted by Jones Lang LaSalle NJ News Blog at 10:26 AM
The unfolding saga of retail REIT Mills Corp. (nyse: MLS) got an interesting wrinkle yesterday when an investor group revealed that it has acquired 6.4% of the troubled company's plummeting stock. According to SNL Financial, a pair of Midwestern hedge funds, Milwaukee-based Stark Investments and Shepherd International Investments of Madison, Wis., had reported their holdings in a 13D filing with the SEC.The investors behind Stark and Shepherd are Brian Stark and Michael Roth, two friends born just three days apart.
But the real estate player behind the scenes is likely Louis Conforti, a seasoned REIT investor whose Greenwood Group, a hedge fund manager focused on small-cap REITs, was recently acquired by Stark.The group's acquisition of a piece of Mills worth roughly $144 million (MLS closed at $40/share Thursday) is likely just the opening salvo in what could become a fierce buyout battle for the Arlington, Va. REIT. Earlier this week, Vornado Realty Trust (nyse: VNO) confirmed that it is in "informal" talks with Mills.
Vornado has made opportunistic investments in retailers Sears and Toys 'R' Us and in McDonald's, and is deep in acquisition mode.Mills is the perfect target for a buyout because of its existing portfolio of some 42 large retail and entertainment properties in the U.S., Canada and Europe, and an extensive, if risky, development pipeline. Since late 2004, Mills has twice been forced to restate earnings and has dropped ten development projects.
It has also laid off 89 employees, and has hired investment banks J.P. Morgan Chase and Goldman Sachs to explore "strategic alternatives," including a possible sale; meanwhile, its stock has plunged from a high of 68 last year, even as REIT shares in general have soared. And Mills is the target of an SEC investigation; the company has also acknowledged that it will not meet a mid-March deadline for completing its annual report.
It has also said that its 2005 earnings will be "significantly below" expectations.The company's turmoil could seriously affect leasing and financing efforts at Mills' two highest-profile projects, the $1.7 billion Xanadu Meadowlands development in New Jersey and the Block 37 project in the heart of downtown Chicago, which Mills is calling 108 North State Street.
Orchid Cellmark (Nasdaq: Orch) today said it appointed Thomas A. Bologna, 57, as CEO, replacing Dr. Paul Kelly, who has left the company.
Bologna will also serve as a director of Princeton-based Orchid Cellmark. Bologna previously headed Quorex Pharmaceuticals, a company focused on pre-clinical anti-infective treatments. The executive holds B.S. and M.B.A. degrees from New York University. Orchid Cellmark provides human DNA-testing services for forensic, family relationship and security applications; and agricultural DNA testing for selective trait breeding.
Orchid stock changed hands at $6.74, up $0.58, this afternoon. - Martin C. Daks
posted by Jones Lang LaSalle NJ News Blog at 10:23 AM
Seeking some $1.8 million a year in cost reductions, Bioject Medical Technologies (Nasdaq: BJCT) announced today it will close its New Jersey administrative office in Bedminster. The firm is also cutting headcount, and research and development at its Portland, Oregon facility. The company, which develops needle-free drug delivery systems, also says it's getting an injection of $4.5 million from Sanders Morris Harris (SMH), a private equity fund manager, and $1.25 million debt financing from Partners For Growth.
Under the agreements, Bioject has received a $1.5 million initial bridge loan, made up of 10% convertible notes from SMH. The securities are due April 1, 2007, and are secured by a second lien on all of the assets of Bioject and its subsidiary.
The net proceeds from the loan will be used as working capital to fund operations until the company completes a planned closing of Series E preferred-stock financing.
In connection to the transaction, Jerald S. Cobbs, managing director of SMH, was appointed to Bioject's board of directors. Bioject shares dropped $0.06 to $1.50 in afternoon trading. - Martin C. Daks
posted by Jones Lang LaSalle NJ News Blog at 10:00 AM
Trump Taj Mahal Unveils Plans for $250M Hotel Tower By Eric Peterson Last updated: March 9, 2006 08:18am
ATLANTIC CITY-Putting some teeth in his casino company's bounce-back plan, Donald Trump has unveiled detailed plans for a $250-million, 45-story, 800-room addition to his Trump Taj Mahal Casino Resort here. If all goes as planned, work could be under way by mid-year, with completion slated for the summer of 2008.
The project is the next step in Trump Casinos' post-bankruptcy bounce-back effort. Step one came in late 2005 when company officials announced they would spend $110 million to renovate the existing Taj Mahal, the Trump Plaza Hotel and Casino and the Trump Marina Hotel Casino. "We did a wonderful deal when we did the recapitalization," Trump said in a prepared statement. "We have a lot of cash on hand and access to a lot of cash. Now we're going to make a big investment to make the Taj number one in Atlantic City again."
The project comes as the Borgata Hotel Casino & Spa is starting work on a new $325-million tower, the second phase of a $525-million expansion that will add 800 rooms, more gaming and retail space. And Harrah's is spending $500 million to add more rooms and new retail and entertainment attractions.
A sidelight to Trump's announcement is that when the Borgata opened in the summer of 2003, it wrested away the title of Atlantic City's tallest building from the Taj, its 479 feet topping the Taj by just over 60 feet. The Taj's 45-story expansion will top out at 485 feet, which would narrowly take the title back by just six feet.
"That wasn't a big factor on our thinking," Trump told reporters this week. "This wasn't a deliberate plan to build the tallest building. But I always like height." In any event, the 485 feet might not even be enough once the construction dust clears. The final heights for the Borgata and Harrah's expansion haven't been announced yet.
This week's unveiling of the new tower, which would be located on Boardwalk side of Pacific Avenue, was part of the construction application process with the New Jersey DEP. The expansion will need the state agency's final approval under the terms of the Coastal Area Facilities Review Act. According to Trump Casinos' president and CEO, James B. Perry, company officials don't expect any problems in the approval process.
Also in the works for Trump is a plan for redeveloping the Steel Pier, situated across the Boardwalk from the Taj. Plans would likely include some combination of retail and entertainment. In recent years, the pier has been operated by a local company as an amusement park under a lease with Trump, but the lease expires after this upcoming summer season.
posted by Jones Lang LaSalle NJ News Blog at 3:53 PM
State Officials Roll Out Corzine Administration’s Agenda By Eric Peterson Last updated: March 9, 2006 11:18am
NEW BRUNSWICK, NJ-The topics were familiar--“smart growth,” brownfields redevelopment, environment, affordable housing and transportation, among others. But the spin was a little different because a new administration is in place in Trenton, and three of Gov. Jon Corzine’s top cabinet members yesterday offered some hints of what’s ahead at a public policy symposium sponsored by the New Jersey Chapter of NAIOP.
Among other things, according to Susan Bass Levin, commissioner of the Department of Community Affairs, Corzine is intent upon creating at least 100,000 affordable housing units over the next decade. “There is an obligation to provide affordable housing as part of general growth by the towns,” said Levin, who is a holdover from the previous Codey/McGreevey administration. “We are asking towns to look at long-term planning, not short-term spot planning.”
On the subject of brownfields, “we will continue to focus on redeveloping these sites,” Bass Levin told chapter members. “We will do that even though it’s more expensive than developing open space.”
Bass Levin also indicated that the “state growth management plan is undergoing a review as required by statute.” Part of that review involves inter-agency relationships, what she termed a “cross-acceptance process.” She conceded, as well, that a restructuring of state agencies relating to the state’s looming budget crisis is something that may factor into the larger equation.
On that subject, Lisa Jackson, commissioner of the New Jersey DEP said, “we’re at a critical juncture tied to cross-acceptance. We’re facing shrinking resources in government regarding the budget.” Other issues on DEP’s plate, said Jackson, include “re-energizing the water quality management planning process. There is a long road ahead in terms of fixing the planning rules and how to expedite permitting. We want predictability and transparency--this has to be a two-way street.”
Jackson also indicated that Gov. Corzine “is in favor of keeping the moratorium on fast-track permitting to determine what to do with it.” The legislation to speed up permitting in certain parts of the state was signed into law by former Gov. James McGreevey, then quickly put on the shelf in the face of criticism. Jackson also challenged builders “to build smarter regarding the environment, green building materials and low-impact design.”
One of the challenges facing Kris Kolluri, new commissioner of DOT, is the state’s transportation trust fund, which could be bankrupt by June with serious implications including matching federal funds. “The governor’s plan is to develop a long-term consensus on solving the problem, but also develop a five-year game plan.” For the latter, “the governor will direct that all gas tax collections be directed to the trust fund, and that more of the money collected from the toll roads will go to the fund.”
Regarding development, “our guiding principle is not to make a transportation capacity expansion if it’s going to be obsolete in a couple of years. We will ask that a project’s master plan be well thought out. We need predictability from an investment standpoint." Kolluri also indicated DOT will “focus on the development of transit villages, and DOT wants to play a bigger role than just giving money.”
A panel of top state legislators followed with their own take on the issues. Moderator Anthony Pizzutillo of Issues Management raised the specter of eminent domain, with Senate majority leader Bernard Kenny, Jr. (D-Hudson) responding, “redevelopment is good. Eminent domain, if used properly, is necessary. But we have to look at fairness and the way property owners are compensated.”
Assembly speaker Joseph Roberts (D-Camden) also supported the concept, “but the process has to involve people in the community.” Noting there are several bills in the legislature involving eminent domain, Senate minority leader Leonard Lance (R-Hunterdon) called for “a rational, calm, deliberate approach.” Assembly minority leader Alex DeCroce (R-Morris) also called for fairness: “I don’t want to see people get hurt by arbitrary things.”
As for property tax reform, all four tied the state’s high taxes to home rule and New Jersey’s complex mix of 566 municipalities. Regionalism would bring down taxes, they agreed, with Roberts explaining, “we’re paying a dear price for the structure we have. It’s all about choices.” For dealing with tax reform, Robert expressed support for a constitutional convention of citizens elected solely for that purpose, with no other agenda. He said that Corzine was leaning toward a “special session of the legislature to set the parameters for a constitutional convention.”
Lance, meanwhile, warned that such a convention could result in “higher taxes for commercial real estate,” which is currently taxed at the same rate as residential. DeCroce expressed support for keeping the matter in the legislature, as did Kenny, who reiterated, “it’s all tied to the way we function as a state.”
posted by Jones Lang LaSalle NJ News Blog at 3:52 PM
First Industrial Buys Two Buildings Totaling 82,000 SF By Eric Peterson Last updated: March 8, 2006 10:03am (To read more on the industrial market, click here.)
PENNSAUKEN, NJ-First Industrial Realty Trust has added two industrial buildings totaling just under 82,000 sf to its portfolio. The sellers were EHL Holdings and Capital Management Systems.
The sellers were represented by Colliers L&A of Philadelphia, and specifically by that firm's Marc Isdaner and Barry Greenberg. No selling price was released.
The first building, located at 855 Hylton Rd., is a 44,000-sf warehouse on 2.45 acres with 20-ft. clear ceilings. The second, at 8181 N. Crescent Blvd., is a 37,875-sf warehouse on two acres with 14-ft. ceilings. The two properties were, until recently, occupied by Parts Distributors and Fleet Parts Distributors, both of which relocated to a larger facility in Moorestown, NJ. With the sale, First Industrial, which has its regional office in Exton, PA, has also tapped the Colliers L&A team of Isdaner and Greenberg to market the properties once upgrades and renovations are completed.
posted by Jones Lang LaSalle NJ News Blog at 3:50 PM
Lane Bryant Leases 6,000 SF By Eric Peterson Last updated: March 8, 2006 10:08am (For more retail coverage, click GlobeSt.com/RETAIL.)
SOMERSET, NJ-Lane Bryant has added another store to its growing chain, signing on for just under 6,000 sf at Somerset Shopping Center. One of the oldest shopping centers in New Jersey, Somerset is located at the intersection of Route 202/206 and 22.
Ethan Goldsmith of Levin Management Corp., North Plainfield, NJ, negotiated the lease with Lane Bryant. Levin Management operates the 214,202-sf center for its owners. Terms of the lease were not disclosed.
Lane Bryant joins a tenant roster anchored by Barnes & Noble and Linens 'n Things. Eastern Mountain Sports, Annie Sez, Pier 1 Imports, TGI Friday's, Mikasa, RiteAid, Hallmark and Pearle Vision are among the other tenants, and Gap, GapKids, babyGap and GapBody were recent additions.
"We've put together a complementary tenant mix of national, regional and local retailers," says Matthew Harding, president and COO of Levin, which has in recently years repositioned the original shopping strip as a lifestyle center. "The growing roster of tenants continues to satisfy the buying needs of this upscale population."
posted by Jones Lang LaSalle NJ News Blog at 3:14 PM
Advance Realty Acquires 445 South Street for $30.2M
Building Now Known as "Advance at Southgate"
The National Business Parks, Inc. recently sold 445 South Street in Morristown, NJ, to Advance Realty of Bedminster for $30.2 million, or roughly $94.38 per square foot.
The new owner has begun work on $20 million renovation of the building that will include improvements to the HVAC system, curtain wall, roof and parking facilities. The building is part of the Southgate Corporate Center and has been renamed "Advance at Southgate."
The 320,000-square-foot, three-story low-rise office building was built in 1984. The renovated space is expected to be available for lease in June 2006.
Jeffrey Dunne and Kevin Welsh of CB Richard Ellis represented the seller. Advance Realty represented itself in-house.
posted by Jones Lang LaSalle NJ News Blog at 3:00 PM
New York City added more jobs last year by Tom Fredrickson March 08, 2006
The city economy added 49,000 jobs last year, nearly 50% more than previously released figures, and job growth has quickened in early 2006.
The New York City economy created 49,000 jobs last year, nearly 50% more than previously released figures, and job growth has accelerated in early 2006.
The new numbers, an annual monthly average, reflect the state Department of Labor’s major annual revision released Wednesday. Previous numbers indicated the economy had gained about 35,000 jobs in 2005.
Separately, the Labor Department reported that the city’s seasonally adjusted unemployment rate stood at 5.6% in January, down from the 5.8% rate in December.
While upward revisions of jobs figures are normal during times of economic growth due to the undercounting of hiring at small firms, the changes came in at the high side of expectations, said James Brown, an economist with the state Department of Labor.
The increases may boost demand for office space, especially benefiting the city’s real estate industry.
"It will certainly encourage people to push forward with various office projects," Mr. Brown said. "This is perfect news for them -- job growth is stronger than we thought and it’s concentrated in the office industries of professional services and finance."
Several job categories saw big seasonally adjusted revisions, according to Barbara Byrne Denham, economist with Jones Lang LaSalle. Accounting saw an increase of 4,000 accountants compared to the zero change previously reported. Social services gained 5,200, compared to a 2,800 gain. Commercial banking gained 2,600 versus a previously reported drop of 900.
The gains picked up steam in January 2006, when the city added 25,000 jobs on a seasonally adjusted basis, Ms. Denham said. The unusually large gain is somewhat distorted because of the relative weakness in the December job numbers and by increases from unseasonably warm weather in January. Still, the two-month average gain of 15,000 jobs was quite strong, she said.
posted by Jones Lang LaSalle NJ News Blog at 2:34 PM
Prudential to Buy Allstate's Variable Annuity Business
Prudential Financial (NYSE: PRU) in Newark plans to buy Allstate's variable annuity business for an initial investment of about $560 million. The deal is expected to close in the second quarter.
During the transition, which many extend to 24 months from the date of closing, Prudential will manage Allstate Financial's in-force variable annuities, which carry account values of some $16 billion as of the end of last year.
Pru's rank within the advisor-sold variable annuity market, which excludes group retirement plan contracts, would jump two notches to third in terms of assets under management, and with respect to sales, from seventh to fourth.
Further, the insurance giant will obtain exclusive rights to sell the annuity products through Allstate's salesforce of some 13,700. It may also build ties to Allstate's nonproprietary channel, which includes national and regional securities firms like Morgan Stanley.
Allstate Financial, meantime, will continue to market variable annuity products designed by Prudential and carrying the Allstate brand, through its bank distribution network.
David Odenath, president of Prudential Annuities, noted that the deal presents little overlap with the firm’s existing Independent Financial Advisors channel.
Variable annuities, often featured in retirement planning, are typically invested in mutual fund and remit periodic payments for the holder’s life and offer a death benefit.
Shares of Prudential fell $0.17 to $75.34 in afternoon trading. - Ki Kim
posted by Jones Lang LaSalle NJ News Blog at 2:33 PM
Manhattan to run out of office space: report by Julie Satow March 08, 2006
Demand for Manhattan office space will outstrip the existing and projected supply in seven years, according to a report by CB Richard Ellis.
Demand for Manhattan office space will outstrip the existing and projected supply in seven years, making development in Lower Manhattan and on the west side necessary, according to a report by CB Richard Ellis.
With office employment estimated to grow by 1.4% a year, the brokerage firm projects that vacancy rates will decline to below 5% by 2008 and to below 3% by 2009. This supply constraint will push up rents, with average asking rents reaching as high as $90 a square foot by 2010. The projections do not consider economic factors such as inflation and interest rates.
"With vacancy rates declining, rents increasing and few new construction projects on the horizon, our ability to keep pace with future business growth in the city is threatened," said Mary Ann Tighe, the chief executive of CB Richard Ellis for the New York Tri-State region. The brokerage said the office shortage makes development of the World Trade Center site and at the Hudson Yards on Manhattan’s west side necessary. The Ground Zero project is bogged down by the rift between leaseholder Larry Silverstein and the Port Authority of New York and New Jersey, which owns the site. Commercial development on the west side awaits transportation improvements.
In Midtown, an average of 9.1 million square feet of office leases is expected to expire annually over the next 10 years, the report released Wednesday says. That means that about 500 tenants will face expiring leases and new rents that are as much as 60% higher than they currently pay. Tenants could be forced to leave New York to find cheaper office space. The market "is strong, but that very strength could portend challenges to retaining its office employee base," said Ms. Tighe.
While demand is expected to increase, office construction has fallen in the past six years. While an average of 4.2 million square feet was constructed every year since 1950, since 1990 that number has dropped to only 1.2 million square feet a year. The rising cost of construction materials and labor, as well as a dearth of construction sites in Midtown means the trend will continue, the report says.
Excluding the World Trade Center, there are only 8 sites in Manhattan large enough to allow as-of-right construction of a one-million-square-foot office building, according to CB Richard Ellis. Considering that some of those buildings will be residential and that only two are near transportation hubs -- the Farley Post Office and Penn Plaza -- and the number of developable plots is even scarcer, the report says.
posted by Jones Lang LaSalle NJ News Blog at 2:36 PM
Biovail HQ Sells for $22M By Eric Peterson Last updated: March 8, 2006 07:52am
BRIDGEWATER, NJ-Newkirk Realty Trust has acquired Bridgewater Corporate Center, the corporate headquarters site for Biovail Pharmaceuticals Inc., for $22 million. The 116,000-sf, three-story asset located on Route 202/206 North in this Somerset County township traded for just under $190 per sf.
Newkirk Realty Trust is a Boston-based REIT that focuses on single-tenant and net-leased assets. US Realty Advisors was the financial advisor to Newkirk. The seller, Sunbelt Management, a Delray Beach, FL-based fund backed by private German investment money, was represented by Grubb & Ellis. For G&E, John Hoffman, Matthew Schnurr and Michael Harrington of the firm's institutional investment group, Fairfield, orchestrated the transaction. "Investor demand for this asset was created when we highlighted the long-term lease to Biovail, the credit tenancy, strong market fundamentals, recent capital upgrades to the building and the below market lease rate," Hoffman says. “The due diligence and closing was completed in less than 23 days.”
"Sunbelt Management mostly owns CBD office towers, which this building isn't," Schnurr tells GlobeSt.com, noting the suburban location of the asset. "With this sale, Sunbelt is modifying their portfolio slightly and redeploying the returns into other core properties."
The asset was originally developed as a build-to-suit in 1986 for Chubb Insurance, which used it for several years as a regional headquarters and call center. Sunbelt Management subsequently acquired the property subject to Chubb's long-term lease, but the latter eventually vacated the premises in 2002.
In an expansion move on its part, Biovail then moved into the center in November 2003, less than a year after it was vacated. Biovail is a specialty pharmaceutical company and the North American division of the Mississauga, ON-based Biovail Group.
posted by Jones Lang LaSalle NJ News Blog at 10:58 AM
PNC Bank Extends 44,000-SF Lease for 10 Years By Eric Peterson Last updated: March 7, 2006 10:59am
WEST PATERSON, NJ-PNC Bank has extended its lease for the 43,634 sf the financial services company currently occupies at One Garret Mountain Plaza here. The lease extension is for 10 years.
Further terms of the signing were not released. David Simson, president of GVA Williams of NJ, Parsippany, exclusively represented the tenant.
The building is owned by the Hampshire Generational Fund LLC, a commingled, discretionary real estate investment fund managed by the Morristown-based Hampshire Cos. Hampshire bought the 173,259-sf asset in 2000 for $14.7 million as part of the first round of acquisitions by the then newly-formed private investment fund management company. Hampshire’s assets have now grown to more than $1 billion.
As part of the transaction, Hampshire will launch an upgrade involving both PNC’s space and the building’s common areas, according to Norman Feinstein, Hampshire’s executive vice president. The common area improvements will include a redesign of the lobby and common hallways, improved building signage and renovations to the on-site café.
Besides PNC Bank, whose name is on the class A building, One Garret Mountain Plaza is co-anchored by North Jersey Media Group. The building overlooks I-80 at Exit 56, at the foot of the Garret Mountain Reservation.
posted by Jones Lang LaSalle NJ News Blog at 10:58 AM
Matthews Inks 40,000-SF Warehouse Lease By Eric Peterson Last updated: March 7, 2006 09:59am (To read more on the industrial market, click here.)
BELLMAWR, NJ-Matthews International has signed a lease for 40,000 sf of warehouse space at 321 Benigno Blvd. within Korman’s Interstate Business Park here. The transaction involves a full-building lease for Matthews, a Pittsburgh-based producer of handcrafted cast bronze memorial products and statuary. The building’s floor plan includes 3,200 sf of built-out office space.
“They are relocating from Runnemede, NJ because of their rapid growth and the need for additional space,” says Marc Isdaner, senior vice president of Colliers Lanard & Axilbund of Philadelphia. Isdaner arranged the signing, the terms of which were not released, on behalf of the owner of the building, Interstate Holdings Inc.
Related to the signing, Colliers L&A is currently also marketing a 78,000-sf warehouse building within Korman’s Interstate Business Park. The park itself is located near I-295 and Exit 3 of the New Jersey Turnpike in South Jersey.
posted by Jones Lang LaSalle NJ News Blog at 10:57 AM
170,000 SF of Leases Fills Two Hartz Buildings By Eric Peterson Last updated: March 6, 2006 03:03pm (To read more on the industrial market, click here.)
SECAUCUS, NJ-Hartz Mountain Industries, based here, has filled up two of its local buildings with a total of 170,000 of recently signed leases. Most of that is industrial space taken by two companies in Hartz’s 5601 Westside Ave. here.
In the largest of the signings, Petrapport has taken a total of 87,000 sf of distribution space at 5601 Westside Ave. The tenant is a 20-year-old company that provides pet products, marketing them under the Beefeaters brand. In the second lease at 5601 Westside, a 350,000-sf asset, Cort Furniture Rental has leased 67,000 sf. The tenant is a national furniture rental company, and the local site is one of its more than 200 locations nationwide.
And in a separate transaction, Petrapport has taken 8,000 sf at the nearby 5801 Westside Ave., effectively filling up that 134,000-sf Hartz-owned building. Petrapport is using the location to house its headquarters operations. Terms of the various transactions were not released.
“Tenants continue to choose this area for its infrastructure, which includes the Port of Newark and Elizabeth,” says Emanuel Stern, Hartz’s president and chief operating officer. “Any time there are industrial properties available within a few miles of so many mass transit options, there will be tenants who will take advantage of the opportunity to be located here.”
And while 5601 and 5801 Westside Ave. are both now fully leased, Hartz still has space available at other of its nearby buildings, including facilities along Westside Ave., Tonnelle Ave. and 91st St. Ernie Christoph and Charlie Reese are handling the various locations internally for Hartz. Hartz’s current portfolio totals approximately 200 industrial, office and retail properties in the New Jersey/New York metro area, amounting to some 38 million sf.
posted by Jones Lang LaSalle NJ News Blog at 10:56 AM
TIAA-CREF Realigns Asset Group Investment Team Is Merged With Business Operations; Evans Tapped to Lead Unit By ARDEN DALE March 8, 2006; Page C15
In a move that reflects an effort to streamline its activities, TIAA-CREF said it has realigned its asset-management business and named a head for the new area.
The pension and annuity giant also appointed a new chief investment officer, Edward Grzybowski, to oversee investment strategy.
The organization said Scott Evans, who had been TIAA-CREF chief investment officer since 2003, has been named executive vice president of the newly created asset-management area. Mr. Evans also was named chief executive of investment-advisory subsidiaries Teachers Advisors Inc., and TIAA-CREF Investment Management LLC.
In his new role, Mr. Evans will be responsible for developing TIAA-CREF's investment products and for oversight of the company's more than $370 billion in combined assets under management.
TIAA-CREF Asset Management combines the company's investment-management capabilities with sales, product-development and support-service resources.
"Working more efficiently as a single business unit to produce TIAA-CREF brand asset-management products that meet the needs of our clients is the goal of creating this distinct business area with TIAA-CREF," Mr. Evans said in a prepared statement. "By integrating investments with the business side of asset management, we can be more flexible and responsive to our customers' long-term investing needs."
Mr. Grzybowski, who succeeded Mr. Evans as investment officer, is the former head of TIAA-CREF Investment Services, the operations and processing unit for the investment area. In his new role, he is responsible for investment policy and strategy. Reporting to Mr. Grzybowski are Susan Ulick, head of equity investment, John Somers, head of fixed income and real estate, and Jayesh Bhansali, head of derivatives strategy and trading.
Mr. Grzybowski has held a number of roles in his nearly 20 years at TIAA-CREF, including group managing director overseeing fixed income and short-term funds, bond lending, and the foreign currency and derivative trading units.
The changes, announced yesterday, were effective on March 1.
posted by Jones Lang LaSalle NJ News Blog at 10:41 AM
The folks in charge of transforming New York's historic James A. Farley Post Office into a welcoming new train station seem to be changing architects like Mr. Rogers changed shoes. First there was Hellmuth, Obata + Kassabaum, or HOK, one of the country's largest architecture firms. In the early 1990s, its New York office created a master plan for Amtrak to move train services into the old postal building from across the street at Pennsylvania Station. Then federal funding disappeared. When more money was scrounged up, a team of government agencies issued a new solicitation for architects. David Childs of venerable architecture firm Skidmore, Owings & Merrill won the competition with a sketch for a train receiving hall topped with a crescent-like glass roof. It was nicknamed the "potato chip" for its curvaceousness.
In 2004, Amtrak bowed out of the project, citing budget concerns. The state Moynihan Station Development Corp. dropped Skidmore when it went looking for a private development team without Amtrak. The state selected real-estate duo Steven Roth of Vornado Realty Trust and Stephen M. Ross of Related Cos., who in turn hired HOK to create a new, more cost-effective plan. HOK's new scheme also had a glass roof but evoked the original Pennsylvania Station, with tall columns supporting an undulating glass canopy.
Now, says a spokesman for Messrs. Roth and Ross, the pair have gone back to Mr. Childs to redesign this project, which could cost close to $1 billion. It isn't yet clear if the potato chip will return as well.
Vanishing Act
The number of affordable apartments continues to dwindle.
In a report due for release today, Harvard University's Joint Center for Housing Studies says the U.S. is losing more than 200,000 rental units each year as a result of demolition, conversions to condominiums and other factors.
While such government initiatives as the Low-Income Housing Tax Credit contribute more than 100,000 new units of affordable rental housing each year, that is still less than the number of low-rent units that are vanishing.
It is a concern that some think is somewhat underplayed. "In this country, we are so focused on homeownership -- that's the headline," says Nicolas P. Retsinas, director of the Joint Center. "But rental housing is a very important part of the marketplace."
About 20% of renters have median annual incomes topping $60,000, but renters at the middle and lower end of the market feel most squeezed, according to the study. Median asking rent in the U.S. rose to $974 a month in 2004 from $734 in 1994. But for that same period, monthly renter income grew only to $2,348 from $2,272.
Still, William Apgar, senior scholar at the Joint Center, believes favorable demographics and the maturation of the so-called echo baby boom -- the children of baby boomers -- should ensure that the market-rate rental market expands in the next decade.
Europe's House Party
The European housing market remained generally buoyant last year, but the fun may end this year.
In the United Kingdom, house prices rose about 3% in 2005, compared with 12% in 2004, according to a report by the U.K.'s Royal Institution of Chartered Surveyors. Estonia and Denmark had the highest level of house-price inflation, at 28% and 22%, respectively. House-price increases in Spain, Sweden and France were next highest, up 15%, 12% and 10%, respectively, the report shows.
But report author Michael Ball warns that European Central Bank rate increases could have a significant impact on house prices, particularly in countries such as Spain and France. Already, house prices in Germany continued to stagnate in 2005, with prospects for 2006 not looking promising with an end to government subsidies for owner-occupied housing. Mr. Ball doesn't expect a housing-market crash, but the report notes, "There are signs that 2006 will signal a marked reduction in house-price growth across Europe."
Further ECB rate increases beyond the key rate's current 2.50% -- after last week's increase of a quarter of a percentage point -- will likely be partly responsible for the reduction. --Alex Frangos, Kemba J. Dunham and Ilona Billington
posted by Jones Lang LaSalle NJ News Blog at 10:31 AM
SPECIAL TO THE WALL STREET JOURNAL By SARA SEDDON KILBINGER March 8, 2006; Page B4
DB Real Estate Investment GmbH, the real-estate arm of Deutsche Bank AG, is changing its game. Fresh from the devaluation of its Grundbesitz-Invest fund, which reopened Friday, it is repositioning the fund as a European, rather than a German fund.
DB Real Estate closed the fund in December -- marking the first closure of an open-ended fund in Germany -- to prevent further investor outflows. DB Real Estate announced Dec. 9 that properties in the fund would be re-evaluated by independent auditors, sparking concerns that some properties may be overvalued. The fund had outflows last year of €1.37 billion ($1.65 billion) and was valued at about €5.9 billion before it closed in December.
The fund intends to sell about €1.7 billion of assets this year, mostly in Germany, to lower its weighting in its home market to around 50% within the next two years, said Tim Oliver Ambrosius, DB Real Estate's head of communications. The fund -- which invests mostly in prime, city-center offices -- holds around 60% of its assets in Germany, with the remaining 40% invested in countries such as the United Kingdom, Italy and France.
FURTHER READING
• For more articles on real-estate funds, go to RealEstateJournal.com1 The fund will invest in core European markets such as the U.K. and France, but it also will consider Central and Eastern Europe, Mr. Ambrosius said. Yields in Central and Eastern Europe are higher than those in Western Europe, because the markets are less developed and are seen as riskier. (The yield is the annual percentage return, expressed as the ratio of annual net income to the capital value of a property.)
Likely bidders for the fund's assets include European, U.S. and Asian investors, Mr. Ambrosius said. According to HVB analyst Andreas Weese, real-estate companies, such as Bonn, Germany-based IVG Immobilien AG, and closed-end funds are also likely to be interested.
According to DB Real Estate, the fund has been devalued by 2.4%, or €147 million, since its closure in December. The value of German properties in the fund decreased on average by 5.7%, or €222 million, DB Real Estate said. In contrast, the value of foreign properties increased on average by 3.3%, or €76 million. However, Mr. Ambrosius said some buildings in Germany have been devalued by as much as 25%, while the value of some assets abroad has risen by 10%, although he declined to give further details.
The company declined to say what the value of the fund is now, although analysts' estimates put it at around €5.3 billion, representing a devaluation of 10% from December. And while the German market is picking up, investors are unlikely to forget that the fund was closed, said Guy Barker, the Munich, Germany-based chief executive of real-estate advisory firm and manager Invesco Real Estate, a subsidiary of Amvescap PLC. "The devaluation of 2.4% -- although it was almost 6% for German assets -- makes you wonder what all the fuss was really about," Mr. Barker said.
In January, investors withdrew €4.18 billion from Germany's 35 open-ended real-estate funds, compared with inflows of €1.17 billion a year earlier. However, outflows for February are expected to be less dramatic, said Frank Bock, spokesman for the German funds association BVI. Preliminary figures for February -- which will be made public in mid-March -- suggest a sharp drop in outflows, he said.
Outflows for open-ended real-estate funds in Germany totaled €3.43 billion last year, €3.05 billion of which occurred in December, dwarfing November outflows of €107.53 million.
posted by Jones Lang LaSalle NJ News Blog at 10:30 AM
Apartment complex of 901 units to be constructed on same block as state's tallest building Ricardo Kaulessar Reporter staff writer
77 HUDSON ST. – Construction on the 500-foot building near the Jersey City waterfront is expected to start in late spring or early summer this year.
Number 77 Hudson St. will soon be another new destination on the Jersey City waterfront. The address once designated for a 32-story office building instead will be occupied by a 48-story, 901-unit luxury twin-tower building.
The Planning Board approved the building for construction at a meeting on Feb. 7. One tower will contain approximately 420 condominium units with 420 parking spaces and 10,914 square feet of retail space. The tower will be built by nationally known homebuilders K. Hovnanian Companies of Edison.
The other tower will contain 481 rental units with the same number of parking spaces and 10,181 square feet of retail space. That tower will be built by EQR-Urban Renewal of Vienna, Va.
All parking spaces will be in a garage.
The building is being considered for a 20-year tax abatement by the City Council, with the final approval to be granted at their next meeting this Wednesday.
At 500 feet, the building will be the second-largest building on the block - after 30 Hudson St., the state's tallest building at 791 feet.
Construction is expected to start in late spring or early summer this year, with K. Hovnanian and EQR building simultaneously.
Growing up six years later
In April 2000, the Jersey City Planning Board approved a 32-story office tower with 646 parking spaces for 77 Hudson St. The developers were to have been Secaucus-based commercial real estate developers Hartz Mountain Industries, also owners of the property.
But a Hartz Mountain representative said recently that the office market boom that occurred in the late 1990s in Jersey City began to slow down by 2003, and the decision was made not to go ahead with building a new office space.
Architectural renderings of 77 Hudson St. show that entrances for the building will be on Hudson Street for the east tower and Greene Street for the west tower, with the parking garage entrance on Sussex Street.
Doug Fenichel, spokesperson for K. Hovnanian, commented last week on the uniqueness of the project for the firm.
"It's certainly our first skyscraper, so we are very excited," Fenichel said. "Usually we are known for our portfolio of single-family homes, but this project shows our diversity in urban building."
Fenichel did not give details of how much K. Hovnanian's part of the project will cost and could not give the prices because those amounts, as well as the square footage for the condos, are still being determined. K. Hovnanian plans to build 42 studio, 232 one-bedroom, 110 two-bedroom, and 36 three-bedroom condos.
Using the pricing figures of the condos at the near-completed K. Hovnanian at Exchange Place in Paulus Hook, one-bedroom condos could average $450,000 and up, while two-bedroom units could go for at least $650,000.
K. Hovnanian was also the developer of the Droyers Point community, located on Kellogg Street near Route 440.
EQR did not return a call for comment. They are planning to construct 113 studio, 238 one-bedroom and 130 two-bedroom apartments.
EQR is the developer of several luxury apartment complexes in Downtown Jersey City, including Portside Towers on Washington Street, Hudson Pointe on Dudley Street, and The Pier. Based on their other Jersey City developments, pricing for the EQR apartments could range from $1,775 for a studio apartment at Portside Towers to $6,000 for a three-bedroom, also at Portside.
Ricardo Kaulessar can be reached at rkaulessar@hudsonreporter.com.
A pre-assembled vacant site in the fashion swath of Fifth Avenue is hitting the market through Darcy Stacom and her CB Richard Ellis team.
The 400 Fifth Ave. site on the northwest corner of 36th Street is being sold by the joint venture of Lehman Bros. and Yitzak Tessler.
It's also ready to plunge skyward to 550,000 gross feet and down two levels for a garage. "You have a clean slate and it's ready to roll," said Stacom.
It can support 190,000 feet of hotel uses, along with residential or even offices.
Because the venture already includes air rights from 404 Fifth Ave., the landmarked Tiffany Building across the street, and the sloping land, its view corridor stretches to the Atlantic Ocean, Stacom told us.
Pricing may approach $400 a foot - which is what Stacom obtained from Madison Equities for the Hearst hotel site at 55th and Eighth Avenue - another busy developer believes it will go for more and could hit $500 a foot.
"There's not a lot out there for land," he advised.
Stacom and Bill Shanahan have also added Jeff Dauray from the D.C. hospitality company Molinaro Koger as a full partner to their team.
* Brokers say Citigroup continues to be the gorilla in the market. The firm, which bulked up last year by 550,000 feet, continues exploring for several hundred thousand square feet both downtown and in New Jersey with Neil Goldmacher of Newmark Knight Frank.
* Bruiser Bear Stearns has been out and about toying with expansion space from its cave at 383 Madison. But we understand it's nowhere near the 500,000 feet the industry believed they were seeking at 522 Fifth, 380 Madison and even downtown. The investment house has offices at 320 Park Ave., too, and it may simply expand there. Meanwhile, they have been getting the lay of the land from buddies David Levinson and David Berkey of L&L Acquisitions.
* Did we ever mention that the LeFraks have a piece of 50 W. 57th St. that was sold by the Macklowes for $51.7 million to Vornado Realty Trust? Of course, the real target is the small building and vacant lot next door, not to mention the ability to knock down and combine the whole megillah into a towering edifice. The lot is owned by the same folks who sold the Mayflower and other long-vacant lots to the Zeckendorfs for 15 Central Park West.
lois.weiss@nypost.com
posted by Jones Lang LaSalle NJ News Blog at 10:27 AM
Optimistic finance chiefs are planning capital spending and employment increases, according to the most recent Duke University/CFO Magazine Business Outlook survey. CFO Staff and CFO.com Staff, CFO.com
March 07, 2006
Optimism about the U.S. economy among chief financial officers has reached its highest level in a year, as cash-rich companies stand willing to withstand an increase in inflation and pay over $70 per barrel of oil to reduce U.S. dependency on Mid-East oil.
Those are some of the findings of the Spring 2006 Duke University/CFO Magazine Business Outlook survey, which asks CFOs from a broad range of public and private companies worldwide about their economic expectations. The latest quarterly survey was concluded March 5 and generated responses from 571 CFOs, including 323 from the United States, 153 from Europe, and 95 from Asia. (The survey of European CFOs was conducted jointly with RSM Erasmus University in the Netherlands. Results cited here are for U.S. companies unless explicitly stated otherwise.) Detailed results are available at www.cfosurvey.org.
This quarter, 42 percent of U.S. CFOs are more optimistic than in the previous quarter, while only one-fourth are less optimistic. Although the optimism of finance chiefs is high, however, it's significantly lower than it was two years ago.
"After several quarters of falling expectations, CFOs now see fewer reasons to hold back spending," says John Graham, a finance professor at Duke's Fuqua School of Business and director of the survey. "Increased optimism bodes well for the economy," he adds. Historically, the survey's measure of CFO optimism has been more than 70 percent correlated with future increases in capital spending and corporate earnings, according to Graham.
CFOs expect inflation to rise by 3.3 percent over the next 12 months, while wages and salaries are expected to mount by 4.2 percent. Yet two-thirds of finance chiefs said their companies' outlooks would not be harmed by a jump in the inflation rate to 3.5 percent.
"Even though CFOs expect inflation to rise well above the Fed's comfort level, the CFOs are sending a strong message to the new Federal Reserve chairman to back off," notes Campbell R. Harvey, a professor of international business at Duke's Fuqua School of Business and founding director of the survey. "CFOs are telling the Fed to halt or reverse the rate increases—remarkably nine-in-ten CFOs oppose an interest-rate increase at the end of March."
Finance chiefs are also concerned about other issues, though. Almost half of the CFOs listed intense global competition as the top risk factor for U.S. corporations; increasing health-care costs came in second. Other issues that concern CFOs are increased interest rates, high fuel costs, economic stability, and declining consumer demand. A notable segment of CFOs cited a shortage of skilled laborers as a risk factor.
While noting the long-term risks of dependence on Middle Eastern oil, CFOs report that on average, they would be willing to pay over $70 per barrel if it would reduce that dependence. Optimism has risen in both Asia and Europe, where, respectively, two-thirds of CFOs are more optimistic than last quarter and 46 percent are more optimistic. In Asia, the price of fuel is the main concern for CFOs; in Europe, the cost of labor and declining consumer demand top the list of worries.
Protectionism is on the rise in national economies, according to almost 40 percent of European CFOs. Only 15 percent of European finance chiefs note that it has diminished. Half note that increased outsourcing of jobs will lower domestic European employment.
CFOs expect to boost cash holdings, which are already at an all-time high, by another 2.6 percent in the next 12 months. Asian companies forecast their cash holdings will jump 8.7 percent, while European companies expect cash to decline by 4.3 percent. "Historically, corporations have often held onto cash too tightly," notes Don Durfee, research editor at CFO magazine. "We'd like to see them put this cash to good use, or return it to investors."
Most CFOs intend to direct their companies to hold on to their cash. Those who do plan for their companies to use it will do so to increase investment and acquisitions. Fewer plan to use the cash to increase repurchases and dividends and to repay debt.
U.S. capital spending is poised to improve, with 60 percent of CFOs reporting plans to increase capital spending in the next 12 months. The average increase is 6.5 percent, up from 4.7 percent two quarters ago. European capital spending is expected to increase 6 percent; in Asia, it's expected to jump 17 percent.
Earnings should increase at 81.2 percent of companies this year, with an average boost of 13.1 percent -- an improvement from an excepted increase of last quarter's prediction of 11.4 percent.
This year, 59 percent of U.S. firms intend to increase employment, while 17 percent expect to reduce employment. Overall employment is expected to rise 2 percent in the next 12 months, significantly higher than last quarter's prediction of a 0.6 percent increase. Meanwhile, outsourced employment should rise at 36 percent of companies, with growth averaging 6.5 percent.
BASF Extends Engelhard Bid By Lauren Rae Silva TheStreet.com Wall Street Reporter 3/6/2006 10:50 AM EST URL: http://www.thestreet.com/markets/marketfeatures/10271900.html German chemical company BASF (BF:NYSE ADS) said Monday it extended its tender offer for New Jersey-based competitor Engelhard (EC:NYSE) .
BASF extended the hostile offer until March 17. It's the second time it has moved back the deadline on the offer since launching the bid in early January.
Not surprisingly, holders owning fewer than 1% of Engelhard's outstanding stock have tendered into BASF's $37 per share offer, which had been set to expire Friday. Shares of the company have traded around $40 since BASF first launched its bid Jan. 3, and closed at $39.61 on Friday. When BASF first launched its $4.9 billion bid, Engelhard's stock price shot up 27% in one day. Engelhard's stock, which before the bid never traded above $33, hit an all-time high of $40.92 on Jan. 27.
Late last month, Engelhard said potential suitors signed confidentiality agreements that would allow them to look further at the company's financial performance. The same contract had been offered to BASF, but the company declined to sign.
"We are disappointed that we have been unable to reach an agreement with Engelhard on a confidentiality agreement, but the terms proposed by Engelhard were unacceptable and not in the best interest of Engelhard's stockholders," said Michael Grabicki, a spokesman for BASF. Although specific details of the confidentiality agreement have not been disclosed, the contentiousness centers around the so-called standstill agreement, which could disrupt BASF's current bid and the opportunity to launch bids in the future.
posted by Jones Lang LaSalle NJ News Blog at 10:09 AM
VNU to be bought for $8.9 billion Decides bid for whole firm better than break-up E-mail Print Disable live quotes By Steve Goldstein, MarketWatch Last Update: 5:30 AM ET Mar 8, 2006
LONDON (MarketWatch) -- Dutch media group VNU N.V., which put itself on the block after failing to win shareholder support for its own deal, on Wednesday agreed to be bought by a consortium of firms for $8.9 billion.
VNU, the company that owns Nielsen Media Research and publishes Billboard magazine, said it's agreed to be bought for 7.5 billion euros ($8.9 billion) in cash, or 28.75 euros a share.
The buyer is a consortium of AlpInvest Partners, The Blackstone Group, The Carlyle Group, Hellman & Friedman, Kohlberg Kravis Roberts & Co. and Thomas H. Lee Partners.
Including assumed debt, the value of the VNU deal is 8.6 billion euros.
CEO Rob Van den Bergh, who previously had announced that he would leave the firm, will now quit upon the completion of the deal at the end of May.
VNU shares advanced 1.8% to 27.84 euros a share in Amsterdam morning trading.
The deal may have disappointed some, after a report in February's Wall Street Journal Europe that shareholders wanted the firm to be split into three.
But VNU said a break-up would be too risky, citing concerns over uncertain completion, loss of economies of scale, adverse tax effects, negative client reaction and distraction cost.
VNU will be kept together for at least 18 months.
"It's difficult to predict how shareholders will take it," said Van den Burgh. "At the end of the day, shareholders will have to come to a conclusion, but we came in with a very good result."
VNU had put itself on the block after failing to win backing of shareholders including Fidelity Investments, Templeton Global Advisers and Knight Vinke Asset Management for last year's $7 billion planned acquisition of IMS Health.
The company in January said it was in talks over a sale with the winning bidders as well as Permira Advisors, which eventually dropped out.
At that point, VNU said the consortium was interested in bidding between 28 euros and 28.50 euros for the firm.
VNU separately reported a 3% rise in earnings per share in 2005 to 1 euros a share, coming in ahead of its earlier guidance of 0.85 euros to 0.90 euros a share.
Earnings before interest, tax, depreciation and amortization rose 2% to 587 million euros on a 4% revenue rise to 3.46 billion euros.
The company said its cost-savings program may be accelerated under the private-equity firms. Steve Goldstein is MarketWatch's London bureau chief.
posted by Jones Lang LaSalle NJ News Blog at 10:08 AM
Let's do the twist IRWIN KELLNER Commentary: Yield curve returning to normal By Dr. Irwin Kellner, MarketWatch Last Update: 1:10 AM ET Mar 7, 2006
HEMPSTEAD, N.Y. (MarketWatch) -- Don't look now, but the yield curve appears to be twisting back toward its normal positive slope. Now the question becomes: is this good news or bad news?
The answer: it all depends on who you are.
If you're looking to take out a fixed-rate mortgage, the recent jump in long-term interest rates to multi-year highs is clearly bad news. It's also bad news for homebuilders, or anyone looking to sell a home, for that matter.
Over the past few months, with most of the increases in interest rates at the short end of the curve, the market for new and existing homes has already begun to weaken, so you can imagine what higher long-term rates will do.
Of course, if you're in the market to buy a home, and you have the financing all lined up, you are in the driver's seat, able to strike a better deal than, let's say, this time last year. In other words -- housing's already become a buyer's market, and these recent increases in bond yields only make it more so.
Since it is a borrower as well, Washington will pay more to float long-term debt -- especially now that it has revived the 30-year bond. Needless to say, the thought of higher yields has gladdened the hearts of many a pension fund and other long-term investors.
For the banks, it's a mixed bag.
On the one hand, those institutions that have a huge mortgage department will find that it will soon get more difficult to make loans. On the other, if and as long-term rates rise above short-term rates, the pressure on their profit margins for other types of loans will ease.
As you know, the rates banks pay for their deposits are akin to those on the short end of the curve. Their loans are priced at rates found on the long end.
When the curve inverts, as it did a number of weeks ago, it squeezes the banks' profitability on a lot of the loans they make. That's why most banks prefer to operate in an environment that contains a positively-sloped yield curve, which it looks like they might get.
But the best news of all is for the economy. That's right; the jump in bond yields is actually good for the U.S. economy.
First of all, by twisting the yield curve back to a positive slope, it puts the banks back into the money-creation process, thus reducing, if not eliminating, the possibility that a recession might develop.
In the past, whenever the curve has inverted, for whatever the reason and at whatever level of interest rates, a recession has followed within months.
Second, and just as important, rising bond yields make the Federal Reserve's job of slowing the economy easier. This means that Ben Bernanke and his band of merry central bankers will not have to raise the federal funds rate as much as they might have had the curve remained inverted.
As long as bond rates continue to rise, I'll stick with my forecast of just two more quarter-point hikes to five percent.
Dr. Irwin Kellner is chief economist for MarketWatch. He also is the Weller professor of economics at Hofstra University and chief economist for North Fork Bank.
posted by Jones Lang LaSalle NJ News Blog at 10:07 AM
Pfizer eyes generic biologics market By Val Brickates Kennedy, MarketWatch Last Update: 5:09 PM ET Mar 7, 2006
BOSTON (MarketWatch) -- Pfizer Inc. is considering using its vast manufacturing capacity to enter the emerging market for generic biologics, a top executive said Tuesday.
Biologics are therapies based on living cells, as opposed to traditional pharmaceuticals, which are comprised of chemicals. Because of this, biologics must be manufactured in highly specialized plants that adhere to strict manufacturing processes.
"Biologics manufacturing requires a large amount of capacity," Vice Chairman David Shedlarz said. "We're looking to leverage our capacity.
He added that the company regards generic biologics as a promising new market opportunity, with few having the resources to effectively compete.
Shedlarz made his remarks during a presentation at the Cowen & Co. health-care investment conference in Boston.
Beginning in the second quarter, Pfizer (PFE : Pfizer Inc will be reviewing its biologics capacity to see if additional facilities are warranted, said Shedlarz. Shedlarz said Pfizer is the eighth-largest biotechnology company in the world measured in sales, so it already commands considerable manufacturing might. Its annual biologics sales totaled about $1.5 billion last year, he said.
Not surprisingly, biologics also tend to be far more costly than traditional pharmaceuticals. Pfizer's interest in generic biologics comes in the wake of the first such approval in Europe, Novartis' Omnitrope. Novartis has sued the Food and Drug Administration to approve Omnitrope for the U.S. market. Novartis markets Omnitrope, a human growth hormone, through its Sandoz generics division.
As opposed to generic pharmaceuticals, there is currently no definitive process in place for the approval generic biologics in the U.S. However, a growing number of lawmakers, particularly Sen. Orrin Hatch, have been pushing the FDA to draft guidelines that would swing open the door to generic biologics competition.
Shedlarz also said Pfizer will continue to look for biotechnology acquisitions in the $1 billion to $4 billion range, preferably with later-staged products in the pipeline.
"Most of our acquisitions will be focused in that sweet spot," said Shedlarz, "although not all will be late-stage."
Shedlarz added that the company's recent takeover of European biotech group Vicuron Pharmaceuticals for $1.9 billion was a "good example" of the types of deals the drugmaker was seeking.
Val Brickates Kennedy is a reporter for MarketWatch in Boston.
posted by Jones Lang LaSalle NJ News Blog at 10:05 AM
CITY OF NEWARK IS FIRST MUNICIPALITY TO USE INNOVATIVE LAW TO SPUR REDEVELOPMENT IN CENTRAL BUSINESS DISTRICT
NEWARK, N.J. (January 19, 2006) - The redevelopment of a 37-story former office building in downtown Newark that will result in the city's first market-rate apartments in 40 years is being made possible with bonds issued by the New Jersey Economic Development Authority (EDA) and the first-time implementation of a new creative financing vehicle designed to help municipalities attract new development and ratables into their communities.
The property, known as "Eleven80" because of its 1180 Raymond Blvd. address, is being redeveloped into 317 luxury high-rise rental residences that will offer more than 30 distinctive floor plans, including studios, one-bedroom units with dens, and two-bedroom apartments with private terraces. It will also include a ground-floor retail component. The project is expected to be the impetus for continued revitalization of the city's central business district.
The EDA is the conduit issuer of $7.9 million in bonds, which are part of a complex financing package being used by Cogswell Realty Group to renovate the now vacant building in the heart of Newark's central business district. The 30-year, taxable bonds, purchased directly by MMA Financial, LLC, recently closed at a fixed interest rate of 6.50 percent.
The city and the developer are taking advantage of the Redevelopment Area Bond Financing Law (RAB), which was enacted in 2002 with the strong support of the New Jersey State League of Municipalities and the EDA, said Authority Chief Executive Officer Caren S. Franzini.
"The law provides municipalities with a mechanism for financing the up-front costs associated with local redevelopment projects in designated redevelopment areas, like infrastructure improvements, and land acquisition and demolition costs," she said. "It's a great new tool for the economic development toolbox that is likely to be used more as the concept becomes more widely known."
Since 1974, the EDA has provided $1.68 billion in financing assistance to 477 projects in Newark, creating an estimated 17,000 new jobs and 24,000 construction opportunities that have supported $2.2 billion in total public/private investments, Franzini noted. "Our financing assistance to projects in the City of Newark represents approximately 10 percent of the funding that the EDA has provided to support projects throughout the entire state," she said, "but this is the first RAB financing that we have completed in Newark or anywhere else in the state."
The RAB financing law amended the Long-Term Tax Exemption Law (N.J.S.A. 40A:20-1) to allow PILOTs (payments in lieu of taxes) to be structured to match debt service on the bonds. Thus, the developer makes PILOT payments to the city on the value of improvements to the property, enabled by a tax abatement on the property for those improvements. The city then passes along the payments to a trustee, which uses these PILOTs to make the debt-service payments on the bonds.
The city approved its redevelopment plan under the Local Redevelopment Housing Law in November 1998 and later designated 1180 Astro Urban Renewal Investors, an urban renewal entity and wholly owned affiliate of Cogswell Realty Group, which has developed other Newark sites. The Local Financing Board approved the project in July 2005.
Other financing sources contributing to the $108-million project are Bank of America, the Federal National Mortgage Association ("Fannie Mae"), the Prudential Insurance Company of America, the New Jersey Housing Mortgage Finance Agency, the Amelior Foundation and owner equity.
"This was an extremely complex business transaction and the EDA was able to understand this complexity," said Cogswell Realty Group Chief Executive Officer Arthur Stern. "This has truly been a pioneering effort by all of the parties involved in the financing of this project."
With more than 100,000 people commuting into the city each day to work and another 45,000 people connected with nearby educational institutions, Cogswell Realty believes there is a strong market potential for housing in downtown Newark, Stern said. When Cogswell Realty purchased the building it determined that it was no longer suitable for the modern office user, but perfect for residential purposes. And Newark was desperate for housing within its central business district.
Stern said the project is a natural progression from the New Jersey Performing Arts Center, which the EDA helped finance and develop and which set the city's revitalization efforts in motion in the late 1990s. Newark Business Administrator Richard Monteilh agrees.
"This is the first of several new redevelopment efforts we are working on that are critical to repopulating the downtown district," Monteilh said. "The project is already beginning to spawn increasing interest in Newark's downtown from other developers."
The structure at 1180 Raymond Blvd. across from Military Park was built in 1930 and designed in an art deco style. It was originally constructed as a commercial office building and was used by a number of prominent New Jersey law firms until becoming vacant in the 1990s.
The new design incorporates a variety of apartment types, upscale finishes and an array of amenities, Stern said. The units will be affordably priced with rents ranging from $1,175 per month for a studio to $2,300 for a two-bedroom apartment, Stern said.
Living unit features will include individual washers and dryers, walk-in closets and granite finishes. Other features of the building will include a health club, a business center and lounge, a four-lane bowling alley and a media center. The lobby will be fully restored to its original condition. Security will be provided and there will be a valet parking service.
Ground floor retail establishments may include a bookstore, a deli/grocery, a restaurant and a drug store.
The EDA is an independent, self-sustaining state financing and development agency that works to promote economic growth, job creation and the revitalization of New Jersey's communities with financing assistance, technical support and entrepreneurial training, and real estate development activities.
posted by Jones Lang LaSalle NJ News Blog at 10:03 AM
