Tuesday, December 9, 2008

PKF Predicts Sharp Drop in 2009 Hotel Revenue

ATLANTA, GA—The Lodging industry, like the auto industry, formally heard the bad news today from one of the leading research groups in the U.S.

“U.S. hotels have entered the initial stages of one of the deepest and longest recessions in the history of the domestic lodging industry,” according to a new report issued by Mark Woodworth, (top right photo) president of Atlanta-based PKF Hospitality Research.

Woodworth says hotel occupancy and revenue per room will be sharply reduced in 2009 and won’t start to improve until 2010.

However, for the major hotel owners, the news is cushioned by the fact that most of them will still come out of the downturn with a meager profit margin.

“Fortunately for U.S. hotel owners and lenders, the vast majority of properties are fiscally fit entering the current downturn,” believes Jack Corgel, (middle left photo) the Robert C.Baker Professor of Real Estate at the School of Hotel Administration at Cornell University and senior advisor to PKF-HR.

Corgel says unit-level profit margins are estimated to be 29.4 percent in 2008, well above the 26.1 percent long-term average. Interest coverage ratios for the hotels in PKF-HR’s Trends in the Hotel Industry exceed 1.7.

“While PKF-HR does not believe the current forecast will generate abundant hotel foreclosures and bankruptcies, operating conditions are at vulnerable levels and further deterioration could impact the solvency of U.S. hotels,” Corgel notes.

“In view of the significant volatility in the domestic and global economy, a negative bias on this outlook is appropriate,” he adds.

The 7.8 percent drop in RevPAR the hospitality research firm is now forecasting for 2009 will be the fifth largest annual decline in this important measure since 1930,” according to Mark Woodworth, president of PKF Hospitality Research.

Further, PKF-HR is forecasting the nation’s hotels will not experience a year-over-year quarterly increase in RevPAR until the second quarter of 2010.

The projected seven consecutive quarters of declining RevPAR, beginning with the just reported third-quarter decline of 1.1 percent, according to data from Smith Travel Research, marks the longest stretch of falling revenues endured by U.S. hotels since STR began tracking performance data in the late 1980s.

Woodworth says, “The speed and severity of the downturns in employment and income continue to accelerate.

“Given the strong correlation between these two economic measures and demand for lodging accommodations, we are forecasting 2.5 percent fewer occupied rooms in 2009. This follows an estimated 1.0 percent decline in demand for year-end 2008.”

Except for New Orleans, all of the 50 markets analyzed by PKF-HR are forecast to suffer a decline in RevPAR in 2009.

The main culprit for the decline in RevPAR is the forecast fall-off in demand. In 40 of the 50 markets, PKF-HR is forecasting a lower number of rooms to be occupied in 2009 as compared to 2008.

In 18 of these markets, an above average increase in the supply of hotel rooms “exacerbates the competitiveness of the marketplace.” Woodworth says.

DeFosset Appointed to Board of Directors of National Retail Properties, Inc.

ORLANDO, FL, Dec. 9, 2008 /PRNewswire-FirstCall/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced that Don DeFosset (top right photo) has been appointed to the Board of Directors.

The company also announced the retirement of lead director Clifford R. Hinkle (middle left photo) and that Ted B. Lanier will assume the role of lead director. Mr. Hinkle served on the board since 1993.

"Cliff Hinkle has played an integral role in the history of NNN providing guidance and leadership as we grew from $23 million in assets in 1993 to more than $2.6 billion in assets today," said Craig Macnab,(bottom right photo) Chairman and Chief Executive Officer.

"He imparted timely direction and wisdom and brought a broad investment perspective. We sincerely thank him for his support and service to the company and wish him well."

Mr. Macnab continued: "Ted Lanier has been a director since 1988 and has provided a steady hand helping oversee the company's growth. As lead director he will continue playing a crucial role in the further development of NNN's value to shareholders."

Mr. Macnab added: "We're pleased to be adding a director of the caliber of Don DeFosset. He brings a wealth of diverse business experience and will be a valuable addition for our shareholders."

Mr. DeFosset is the former Chairman, President and Chief Executive Officer of Walter Industries, Inc., a diversified company involved in water infrastructure, flow control, water transmission products, metallurgical coal and natural gas, and homebuilding. He is a director of Regions Financial Corporation, Terex Corporation and EnPro Industries.

NNN acquires, owns, invests in, manages and develops properties that are leased primarily to retail tenants under long-term net leases.

As of September 30, 2008, NNN owned 990 Investment Properties in 44 states with an aggregate leasable area of 11 million square feet.

For more information on the company, visit http://www.nnnreit.com/.

Contact: Kevin B. Habicht, Chief Financial Officer, National Retail Properties, Inc., +1-407-265-7348

$70M financing arranged by HFF for mixed-use redevelopment in Linden, NJ

INDIANAPOLIS, IN – The Indianapolis office of HFF (Holliday Fenoglio Fowler, L.P.) announced today that it arranged $70 million in financing on behalf of Duke Realty Corporation for their mixed-use redevelopment of a former General Motors (GM) manufacturing plant in Linden, New Jersey. (top right site map)

HFF senior managing director Dave Keller (top left photo) and associate director David Ross worked exclusively on behalf of a joint venture between Duke and Stockbridge Real Estate Funds to secure the two-year, adjustable-rate loan with HSBC Bank USA and participants US Bank and The Private Bank.

Loan proceeds will be used to fund the acquisition and redevelopment of the property, including the demolition of the plant, addressing environmental issues and construction of the infrastructure required for future vertical development.

The 104-acre site is located in Linden, New Jersey along Routes 1 and 9 across from the Linden Airport and within close proximity to Port Newark and Port Elizabeth, New Jersey.

The vacant 2.7 million-square-foot GM facility was demolished this year for the proposed development of nearly 1.1 million square feet of modern bulk industrial space and additional retail development.

Currently, remediation work and infrastructure improvements are underway, with vertical construction of buildings anticipated to begin in 2009.

“Duke’s redevelopment plans for the Linden project are patterned on their recent success in redeveloping a former GM plant in Baltimore, Maryland,” said Keller. “In addition to Duke’s experience in Baltimore, the company has a wealth of experience in redeveloping strategic brownfield properties that will help ensure success in this New Jersey redevelopment.”

Founded in 1972, Duke Realty Corporation specializes in the ownership, construction, development, leasing, and management of office, industrial, and health care real estate.

The company owns, manages, or has under development more than 144 million rentable square feet in 24 major U.S. cities. Duke, which controls more than 7,100 acres of land for more than 107 million square feet of future development, also provides nationwide real estate solutions through its national development division.

Stockbridge Real Estate Funds is an independently-owned real estate investment manager focusing on opportunistic investments in major metropolitan markets.

David B. Keller, HFF Senior Managing Director, 317 630-3191, dbkeller@hfflp.com

Joel Reuter, Duke, VP of Communications, (317) 808-6137,

Myra F. Moren, HFF Director, Marketing( (713) 852-3500

Foster Conant to design landscape for new building at First Baptist Orlando

ORLANDO, FL, Dec. 8, 2008 — H. J. High Construction Co. awarded the landscape architectural contract to Foster Conant & Associates for First Baptist Orlando Legacy Center to be located on the Orlando, Fla., campus of the church.(top left photo)

Using the design-build delivery method, Foster Conant is providing the construction and design team with site-specific landscape architectural services that include landscape, irrigation, grading, hardscape, amenities and site lighting layout for the new four-story, 95,000-square-foot administrative and senior adult ministry facility.

According to Foster Conant’s managing principal and lead landscape architect for the project, Richard R. Conant, (top right photo) FASLA, design has begun on the exterior area surrounding the planned building. Design and construction documents are nearing completion. A schedule for construction has not been set.

Other design-build team members include STH Architectural Group of West Palm Beach, Fla., Tipton Associates of Orlando, Fla., KLG LLC, Casselberry, Fla., and TLC Engineering, Orlando, Fla.

Founded in 1969, Foster Conant & Associates is headquartered in Orlando, Fla. The landscape architectural practice has a storied history of designing award-winning, site-specific landscape architecture for high profile public sector projects and private developments throughout the Southeastern U.S.

The 16-person firm is managed by principals Richard R. “Rick” Conant, FASLA, Keith Oropeza, ASLA, RenĂ© A. Ramos, RLA and John P. Sullivan, III, ASLA. Please visit fosterconant.com for additional information.

Contact: Elaine Ingra, PR WORKS!, PH: 407 384-1344,
elainei@pr-works.com and http://www.pr-works.com/

Shaw Mechanical wins renovation contract at Stetson University

ORLANDO, FL— Shaw Mechanical Services LLC is handling mechanical contracting for additions and renovations to five fraternity houses on the Stetson University campus in Deland, Fla. .

Under its $400,000 contract with Deland-based Bace Construction, Shaw Mechanical is providing pre-construction services, value engineering, purchasing, installation, equipment start-up and commissioning for new air conditioning units, chilled water systems and ductwork for the five, two-story houses that total 26,400-square-feet of conditioned space.

The project is scheduled for completion this year. The architect is Carter Architect, P.A. of Deland, Fla. Mechanical engineering is provided by KTD Consulting Engineers of Altamonte Springs, Fla.

Shaw Mechanical Services LLC is a Central Florida-based provider of mechanical contracting and service to building owners, property managers, facility managers, plant engineers, general contractors and consumers.

Comprehensive services provided by Shaw Mechanical include retrofits, renovations, preventative maintenance, commissioning and installation of heating, ventilating and air conditioning systems, process piping, automatic temperature controls and custom climate applications for existing structures and new construction.

Founded in 2001 by David L. Shaw, (top right photo) the privately-held company employs a staff of seventy from its headquarters in Orlando, Fla. Please visit http://www.shawmechanical.com/ for additional information.

Meredith Ingra
Associate/Business Manager
14114 Chicora Crossing Blvd
Orlando, FL 32828
PH: 407-384-1344
FX: 407-384-0324