Thursday, December 31, 2009

Penn National Gaming Closes on Toledo Casino Site

Anticipates 2012 Opening for $250 Million Project




WYOMISSING, Pa. & TOLEDO, Ohio--(BUSINESS WIRE)--Penn National Gaming, Inc. (Nasdaq: PENN) announced today that it completed the purchase of the 44-acre site at 1968 Miami Street that was expressly authorized for casino gaming in the successful November 3 Issue 3 constitutional ballot initiative.

Penn National’s proposed $250 million Hollywood Casino Toledo is expected to open at this location in the second half of 2012.


“Closing on the property moves us a major step closer to making Hollywood Casino Toledo a reality,” said Eric Schippers, senior vice president of Penn National.

 “We’re eager to move forward and excited that this project will bring thousands of construction and permanent jobs to the Toledo area, as well as tens of millions of dollars for the city of Toledo as well as all of the counties and school districts in Northwest Ohio.”

Penn National has designated Kenneth Schultz, Vice President of Design and Construction, to lead its development efforts on the ground in Toledo and the Company announced two new additions to its Toledo team:

Local attorney Richard Mitchell (top right photo) of Mitchell Law LLC, will serve as Penn National’s legal counsel, primarily focusing on employment and real estate matters.


 The Company’s legal team also includes former Ohio Supreme Court Justice Andy Douglas (top left photo)  of Crabbe, Brown & James LLP of Columbus. Mr. Douglas served as Penn National’s legal and political advisor for Northwest Ohio during the Issue 3 campaign, and will continue to serve in that capacity during the development of the casino.

After working closely with the NAACP in Toledo, Penn National has named Jay Black as its diversity consultant for Hollywood Casino Toledo. Mr. Black will assist in developing a comprehensive diversity plan to ensure that the project and the casino’s workforce is inclusive and reflects the diverse nature of the community.

The Miami Street site was purchased by Toledo Gaming Ventures, Inc., an Ohio corporation established by Penn National, from River Road Development, which acquired the property in 2006. River Road used a Clean Ohio Revitalization Fund grant and a matching grant from the city of Toledo to perform environmental remediation on the site.



 In February 2009, the Ohio Environmental Protection Agency approved the completed remediation, clearing the way for redevelopment. Penn National Gaming owns and operates gaming and racing facilities with a focus on slot machine entertainment.

The Company presently operates nineteen facilities in fifteen jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario.

In aggregate, Penn National’s operated facilities feature over 26,300 gaming machines, approximately 400 table games, over 2,000 hotel rooms and over 959,000 square feet of gaming floor space.

Contacts
Eric Schipper, Senior Vice President, Public Affairs, 610-378-8321 or eric.schippers@pngaming.com
Jaffoni & Collins Incorporated, Joseph N. Jaffoni, Richard Land, 212-835-8500 or penn@jcir.com

NAI Realvest negotiates new long term lease for office space at Herndon Center in Orlando


ORLANDO, Fla. -- NAI Realvest recently negotiated a six-year lease agreement for 980 square feet of office space at Herndon Commerce Center, 615-G Herndon Ave. in Orlando.

Michael Heidrich,  (top left photo) principal at NAI Realvest, negotiated the transaction representing the landlord LBJ Properties of Winter Park.


The National Domino Federation USA – an independent non-profit organization for Domino enthusiasts and to promote the sport of Domino in the United States – is the new tenant and was represented by Henry Torres (top right photo)  of Weichert Realtors-Hallmark Properties.

For more information, please contact:


Michael Heidrich, Principal, NAI Realvest 407-875-9989 mheidrich@realvest.com;
Patrick Mahoney President NAI Realvest 407-875-9989 pmahoney@realvest.com;
Beth Payan, Larry Vershel Communications, 407-644-4142 Lvershelco@aol.com.


NAI Realvest makes big jump in Central Florida rankings to region’s second largest commercial property firm



ORLANDO, FL. -- NAI Realvest made a big jump in rankings of Central Florida Commercial Property firms recently.

The annual Book of Lists, published by Orlando Business Journal, ranked NAI Realvest as the area’s second largest commercial property firm with 253 lease transactions and 70 sales that totaled $471.6 million.

Last year NAI Realvest ranked as the region’s fourth largest commercial property firm. George Livingston (bottom  right photo)  is chairman of NAI Realvest.  Patrick Mahoney (bottom left photo)  is president.


For more information contact:

Paul P. Partyka, Managing Partner/Principal NAI Realvest, 407-875-9989, ppartyka@realvest.com
Patrick Mahoney, President, NAI Realvest 407-875-9989, pmahoney@realvest.com;
Beth Payan or Larry Vershel, Larry Vershel Communications 407-644-4142

Emerald Bowl Attracts Record Televised Audience




SAN FRANCISCO, CA--(BUSINESS WIRE)--Diamond Foods, Inc. (NASDAQ: DMND) today announced that the eighth annual Emerald Bowl set a new record television rating.


The Emerald Bowl was broadcast nationally on ESPN in prime time on Saturday night and featured a match up between the University of Southern California Trojans and Boston College Eagles, playing for the first time in more than 20 years.

 The television rating of 5.34 was not only the highest in Emerald Bowl history, but also the second highest rated ESPN football bowl game ever watched. This rating translates into over 5.2 million households and over 8 million viewers for the game.

The game also attracted a sellout crowd, the third in the last four years of the Emerald Bowl.


"When the Emerald Bowl was conceived in 2002, we hoped for a unique match up between two teams with national appeal," said Andrew Burke, (middle right photo) Senior Vice President of Marketing for Diamond Foods.

"We were pleased to have USC and Boston College in the game to help us fill the stadium with enthusiastic fans and draw millions of television viewers.


"Emerald Bowl attendees were able to experience both the Emerald® and Pop Secret® brands throughout game day with product sampling, marketing activation inside and outside AT&T Park and in-game contests and advertising.

"In addition, Emerald and Diamond® advertisements, as well as the brand new Pop Secret commercial featuring animated kernels acting out a scene from the Dark Knight, were aired on television throughout the Emerald Bowl and during other ESPN bowl games on Saturday."

The Emerald Bowl is the only NCAA bowl game featuring a match up between the ACC and Pac-10 conferences. This year's closely-contested game ended in a 24-13 victory for The University of Southern California.



Diamond Foods has been the title sponsor of the Emerald Bowl since its inception in 2002. The Emerald snack line features innovative, great tasting snack nut products and is distributed nationally in a variety of retail outlets.

For more details about the Emerald Bowl, visit http://www.emeraldbowl.org/.

Diamond is a leading branded food company specializing in producing, marketing and distributing culinary nuts and snack products under the Diamond, Emerald and Pop Secret brands.

Corporate Web Site: http://www.diamondfoods.com/
Consumer Web Sites: http://www.emeraldnuts.com/http://www.diamondnuts.com/,  and http://www.popsecret.com/

Contacts:
Annie Liu, 415-445-7425 (Media), Communications Assistant, aliu@diamondfoods.com
Bob Philipps, 415-445-7426 (Investors), VP, Treasury & Investor Relations, bphilipps@diamondfoods.com

Portland investment firm buys KOIN Center



The 25-year-old KOIN Center has 411,000 square feet of office and retail space, and is one of downtown Portland’s most recognizable buildings. It is home to First American Title Insurance, lucy ctivewear, Willis of Oregon, ECONorthwest and KOIN-TV.


PORTLAND, OR--The KOIN Center -- most of it -- has been sold again, this time to a hometown investment firm with more links to China than Portland.

American Pacific International Capital, Inc., in its first play in the region, has plucked 19 floors of the 30-floor building out of foreclosure.

Terms of the deal, which closed Tuesday, were not revealed. But real estate sources indicate the sale price was between $50 and $60 million. California Public Employees' Retirement System, or CalPERS, bought the 25-year-old tower in 2007 for $108 million but defaulted this year on a $70 million loan.


"It's essentially the biggest short sale that's occurred in Portland this year," said Gene Grant, (middle right photo) an attorney with Davis Wright Tremaine in Portland who represented the buyer. "The lender did not get everything they were owed, but they got enough."

New York Life Insurance had taken control of the building after suing the building's owner this summer. The insurer claimed CalPERS failed to make its July mortgage payment on the building.

CalPERS had partnered with Commonwealth Partners, a large Los Angeles real estate investment firm, to buy KOIN Center. The entity, FPS KOIN Center, borrowed $70 million from New York Life in August 2007.

The tower boasts 411,000 square feet of office and retail space and one of downtown's most recognizable buildings. It is home to First American Title Insurance, lucy activewear, Willis of Oregon, ECONorthwest and KOIN-TV. Its top 11 stories of the building are condominiums and were not included in either sale.

Another Portland real estate investment firm, Capstone Partners, considered making a play for the building. But Jeffrey Sackett, (middle left photo) a principal with Capstone, said it could not make the deal pencil out at its asking price.

"We were led to believe by the brokers they had a couple offers north of $50 million that seemed solid," Sackett said. "We didn't feel comfortable...for a lot of reasons. It's a very difficult investment market environment at this point. There's a great deal of leasing risk. There's just very, very low demand for Class A office space."

Still, Sackett said, the deal for what he called a "trophy asset" bodes well for the region's beleaguered commercial property market.


"Any trade is a good thing because it starts to establish value," he said.

APIC, with offices in Portland's World Trade Center, is little known in Portland real estate circles but active in China. It started a palm oil production factory in Chaozhou, China earlier this year and resurrected a soybean oil plant from bankruptcy in Shantou.


Earlier this year, former U.S. Labor Secretary Elaine Chao (bottom left photo)  helped APIC break ground on a development partnership in Shantou to build 92,000 square meters of hotel rooms, condos and retail space called Ocean Panorama.

AIPC president Wilson Chen did not return a call seeking comment.

Grant, who has worked on deals involving KOIN Center since its construction, said he hoped the purchase injects some life into commercial real estate, where owners have seen building values dive below the amount they owe lenders.

"What's happening in commercial real estate is really exactly what's happened in residential real estate," Grant said. "It's just a delayed reaction. We're just now starting to see the commercial short sales."

Maury L. Carter & Associates Brokers $20M Cash Land Sale in Volusia County, FL


ORLANDO, FL--Maury L. Carter & Associates, Inc. ended 2009 with a bang by brokering a $20,066,605.19 cash sale to St. Johns River Water Management District on December 29th.

Daryl M. Carter, (top right photo)  Trustee of Carter-Maytown Road Land Trust was the Seller of the 3,321± acre parcel located on the east side of SR 415 in Volusia County, Florida. The Seller was represented by Daryl M. Carter of Maury L. Carter & Associates, Inc.


Despite the poor economy, Maury L. Carter & Associates, Inc. has closed $41 million in transactions in 2009

Contact: 
Joan M. Fisher, Maury L. Carter & Associates, Inc., 3333 S. Orange Avenue, Suite 200, Orlando, FL 32806-8500, (407) 581-6207 direct, (407) 422-3144 office, (407) 422-3155 fax, jfisher@maurycarter.com

Marcus & Millichap Sells $10.2M Multifamily Property in Salem, OR


SALEM, OR – Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has brokered the sale of Orchard Park, (top left photo) a 224-unit, 210,752-square foot Section 42 Low Income Housing Tax Credit (LIHTC) property in Salem.

The sales price of $10,292,000 represents $45,946 per unit and $49 per square foot.

The Tax Credit Group of Marcus & Millichap (TCG) represented the seller and the buyer. The Tax Credit Group is led by Robert L. Sheppard, (top right photo)  a senior vice president investments, along with Armand W. Tiberio (middle right photo)  and Spencer H. Hurst, (bottom right photo) vice presidents investments.


Matthew Williams, an investment specialist in the firm’s Portland office, also provided representation.


“Orchard Park’s intrinsic value and strong operations, combined with the submarket’s solid fundamentals, made it an attractive investment,” says Tiberio.

Located at 4100 Kacey Circle Northeast in Salem directly off Interstate 5, the property is near major employers and neighborhood services.

Orchard Park was constructed in 1993 under the Section 42 LIHTC program and has extended use restrictions in place until December 31, 2023. The property features 64 one-bedroom/one-bath units, 96 two-bedroom/two bath units and 64 three-bedroom/two-bath apartments.

Press Contact: Stacey Corso, Communications Department, (925) 953-1716

Wednesday, December 30, 2009

Halunen & Associates Announces Court Approves Class Action Settlement with CertainTeed Corp. Estimated at $400M to $600M For Faulty Roofing Shingles

Tens of Thousands of Homeowners May Be Eligible for Compensation Under Terms of Major Class Action Settlement


MINNEAPOLIS--(BUSINESS WIRE)--A nationwide class action settlement received preliminary approval by Judge Louis Pollak, (middle left photo)  U.S. District Court Judge for the Eastern District of Pennsylvania, to make payments to tens of thousands of homeowners across the U.S. and Canada whose roofs have been adversely affected by defective organic shingles manufactured by CertainTeed Corporation.

The settlement has an expected value to the class of between $400 and $600 million, depending on the number of claims made.

“The number of people who have been affected by these faulty shingles is truly shocking," said Clayton D. Halunen (top right photo)  of  Halunen  & Associates, one of the lead attorneys representing consumers in Minnesota as well as 17 other states.

 "The result we achieved for the plaintiffs proves that consumers can achieve real change if they are willing to stand up to corporations such as CertainTeed.”

The Complaint filed against CertainTeed on behalf of the consumers alleges that the CertainTeed organic shingles on their homes were substandard.


The shingles were marketed as durable and offering long-lasting protection, yet not long after their installation many consumers experienced noticeable damage to their roofs and the underlying felt and plaster, as well as to their walls and ceilings.

Halunen noted that “the settlement was reached after over 3 years of contentious litigation . It will benefit all people who have owned, or currently own, a home or structure on which CertainTeed organic shingles were installed from July 1987 through the present.”

Based in Valley Forge, PA with about 300 offices throughout the United States and in Canada, CertainTeed sells the shingles under dozens of brand names including Centennial Slate, Hallmark, Hearthstead, Horizon, Independence, Landmark, Sealdon and Woodscape.


Qualified individuals who own, or have owned, buildings affected by the defective shingles can expect to receive between $34 and $74 per square, depending on whether or not they have a valid warranty.

For more information on the settlement and details on how to file a claim, consumers are encouraged to visit http://www.halunenlaw.com/.

Halunen & Associates was established in 1998. With offices in Minneapolis and Chicago, the firm focuses on employment law and consumer rights litigation, working tirelessly to protect the rights of working people and consumers across the country. For more information please visit www.halunenlaw.com.

Contacts:
Infinite Public Relations, Jamie Diaferia, 212-687-0935, jdiaferia@infinitepr.com
Halunen & Associates, Clayton D. Halunen, 612-605-4098, thome@halunenlaw.com

Jack’s Samba Carnival Set To Shake Up Rose Parade®




                                   Rose Bowl Parade Queen 2009 Courtney Lee (above photo)


Jack in the Box® offers sneak preview of its 2010 Tournament of Roses® Parade float on Dec. 30



PASADENA, CA.--(BUSINESS WIRE)--More than thirty flamboyant Samba dancers along with traditional Brazilian drummers and spectacular 15-foot-tall Carnival Puppets will ignite the streets of Pasadena on January 1 as Jack in the Box® restaurants celebrates the music, dancing and artistry of Brazilian Carnival with its Tournament of Roses® Parade float – “Jack’s Samba Carnival.”

On Wednesday, Dec. 30, from 11:30am to 12:30pm, Festival Artists Worldwide will offer the media a sneak peek at “Jack’s Samba Carnival” as volunteers apply brilliantly-hued florals to the float, under the direction of designer John Ramirez and builder Craig Bugajski.


WHAT:

Media preview of the Jack in the Box "Jack’s Samba Carnival" float with volunteer decorators from Jack in the Box and Big Brothers Big Sisters, the company’s primary charitable partner, plus a special appearance by the Rose Parade Queen & her Court .

WHEN:

Wednesday, Dec. 30 from 11:30 a.m. to 12:30 p.m.

WHERE:

Festival Artists Worldwide, 120 N. Aspan Ave., Azusa, Calif.

WHO:

Rose Parade Queen & her Court
John Ramirez – designer, Festival Artists Worldwide
Craig Bugajski – builder, Festival Artists Worldwide
Christy Stoeckel -- California Big Sister of the Year & rider on Jack’s float
Big and Little matches from Big Brothers Big Sisters and agency representatives
Jack in the Box employees and company officials



Jack in the Box Inc. (NASDAQ:JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 18 states.

 Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Grill®, a leader in fast-casual dining, with more than 500 restaurants in 42 states and the District of Columbia. For more information, visit www.jackinthebox.com.

Contact:
Kathy Kovacevich, (858) 571-2544, Community Relations Manager, Jack in the Box Inc., kathy.kovacevich@jackinthebox.com

Aetna to Take Charge of Approximately $60M to $65 M for Job and Real Estate Actions






The Aetna Insurance Company headquarters building (above centered photo) at 151 Farmington Avenue is the largest brick colonial structure in the U. S. The Phoenix Insurance Company headquarters building (known as the "boat building") is the world's first two sided building. This 1960's glass and steel structure faces the river and is connected to the new Riverfront Plaza downtown.


HARTFORD, Conn.--(BUSINESS WIRE)--Aetna (NYSE: AET) today announced that it expects to incur a fourth-quarter 2009 charge of approximately $60 million to $65 million, after tax.

This charge is due to the previously announced and completed reduction of approximately 625 positions and real estate consolidation that together are expected to result in a charge of approximately $40 million, after tax, and a similarly sized workforce reduction to be completed by the end of the first quarter of 2010 that is expected to result in a charge of approximately $20 million to $25 million, after tax.


These actions relate to Aetna’s previously announced plan to reduce its workforce based upon the company’s membership outlook for 2010 and in preparation for the impact that health care reform and regulatory changes may have on Aetna’s business.

Once the company completes the additional job reductions in the first quarter of 2010, Aetna will have approximately 34,300 employees.

Employees affected by the first quarter 2010 job reductions will be notified at a future date to be determined. Eligible employees will receive severance benefits based on length of service as well as outplacement and other support programs. The company is not exiting any markets as a result of this announcement.

Aetna is one of the nation’s leading diversified health care benefits companies, serving approximately 36.3 million people with information and resources to help them make better informed decisions about their health care. For more information, see www.aetna.com.

Contacts:
Media--Fred Laberge, 860-273-4788, labergear@aetna.com,
 Investor Contact--Kim Keck, 860-273-1327, Keckka@aetna.com


Will Balthrope of Marcus & Millichap Sells Two High-Profile Multifamily Complexes in Texas

The Delante in Dallas/Las Colinas and The Colonnade in San Antonio have traded hands, signaling an increase in transaction velocity as 2010 approaches.

DALLAS, Dec. 29, 2009 – Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has arranged the sale of two multifamily investment properties in Texas. In Dallas’ Las Colinas high-end submarket, the 258-unit, luxury Delante apartments (top left photo) asset was sold, and in San Antonio, the 312-unit Colonnade property (bottom left photo)  changed hands.


Will Balthrope, (top right photo)  a vice president investments and senior director in the Dallas office of Marcus & Millichap’s National Multi Housing Group (NMHG), and Ryan Epstein, an associate director of the NMHG, also in the firm’s Dallas office, represented the seller, a private development firm.

The buyer was Slosburg Cos. of Omaha, Neb.

“This resort-style asset was tracked closely by almost every buyer in the country, and sold on an all-cash basis as we approached the end of 2009,” explains Balthrope.

“This sale is significant for several reasons: It is the only luxury mid-rise to sell in Dallas in 2009, and it closed in only 26 days. In addition, there was significant interest in this property from both private and institutional investors. We showed the building 50 times and received 44 offers, which demonstrates that investors are interested in re-entering the local apartment market.”


The Delante is a 268,000-square foot, four- and five-story asset located at 1001 Lake Carolyn Parkway in Las Colinas, a high-profile master-planned community in Irving, a submarket of Dallas.

The mid-rise community has an excellent location near numerous corporate headquarters offices and across the street from the DART Orange Rail Station, which will connect the property to downtown Dallas and ultimately to the DFW Airport.

In a separate transaction, Balthrope and Epstein also brokered the sale of The Colonnade, a 312-unit Class A apartment community located near the South Texas Medical Center, in an affluent area of north central San Antonio. Balthrope and Epstein represented the seller, Greystar Real Estate Partners, as receiver for Midland Loan Servicing. Marcus & Millichap also represented the buyer, FSC Realty of Beverly Hills, Calif.


Located at 9898 Colonnade Blvd. near Interstate 10, the 12-acre, 284,389-square foot multifamily asset was developed with upscale amenities in 1994.

The property includes well-appointed one- and two-bedroom units averaging 927 square feet within the Colonnade Business Park, a 63-acre mixed-use development with office, hotel and retail tenants.

“During the five weeks that The Colonnade was on the market, we generated 51 offers and gave 52 tours of the property, which is a huge response to a multifamily asset located in San Antonio,” says Balthrope. “REITs, pension fund advisors, life insurance companies, high net-worth individuals and opportunity funds expressed interested in The Colonnade.”


“In the past 90 days, we have seen transaction velocity increase. Investors are stepping off the sidelines because we are at or near the bottom of the downward pricing trend and there has been a lack of for-sale product on the market during the past 18 months,” continues Balthrope.

“When jobs return in late 2010 and 2011 there will be strong rent growth that follows, and in anticipation of that time, we are beginning to see the results of pent-up demand from buyers that have raised capital to purchase distressed assets, but are not finding good quality assets at deep discounts. They are beginning to move today on quality real estate.”

Contact:  Stacey Corso, Public Relations Manager, Marcus & Millichap, 2999 Oak Road, Suite 210, Walnut Creek, CA 94597.
 (925) 953-1716 direct, (415) 672-6460 cell, (925) 953-1710 fax 

Commercial Prices 43.7% Off 2008 and 2007 Peaks, Moody's Says


NEW YORK, NY--The Wall Street Journal reports commercial real estate prices are now 43.7% off their 2008 and 2007 peaks.

The Moody's/REAL Commercial Property Price Index declined 1.5% in October to 107.98 from 109.61 in September. Based on the index, prices for commercial real estate were 36.4% lower than in October 2008 and 43.7% below the peak measured in October 2007.

The index is based on repeat sales of the same properties across the U.S

Tuesday, December 29, 2009

Historic Times Square Building Gets $267M Infusion for New Broadway Future


NEW YORK, NY—The largely vacant Times Square Building, (top right photo) one of the best-known commercial sites in the world has been given a new lease on life.

The owners, Africa Israel and its subsidiary, AFI USA, have received new five-year refinancing totaling about $267 million and access to a revolving line of credit from Banco Inbursa SA.

Five Mile Capital Partners LLC of Stamford, CT is converting its existing debt to equity to become a 50 percent equity partner in the property.

The 25 story, 807,000-sf former headquarters of The New York Times at 229 W. 43rd St. (42nd and Broadway) has had no tenants above the retail floors since the current owners bought the building in 2007.

When it was built in 1905, it was the second tallest building in the world, according to Wikipedia. The building has had several owners since The Times sold the building in 1961.


The digital signs on the building are considered to be the most valuable in the world. They can often be rented by the day or by the hour for product launches or other special events. The rental rates can be as high as $10,000 per hour.

“We applaud the flexibility, creativity and determination of Inbursa, our other lenders and our new partner, Five Mile Capital, for working so hard with us to restructure the debt on the Times Square Building,” says Richard A. Marin, (middle right photo)  Chairman and CEO of AFI USA.

Marin is the former chairman and CEO of Bear Stearns, a New York City-based global investment bank and securities trading and brokerage that collapsed in 2007 and was sold to JPMorgan Chase in 2008


“The renewed commitment of equity and involvement by our chairman Lev Leviev has made this all possible,,” he says. “As a result, we are proud to unveil today new plans for the property that will allow us to create the most value and make the greatest contribution to the Times Square neighborhood.”

AFI USA achieved the successful restructuring of the financing of the Times Square Building by settling the $236 million mezzanine debt with a group made up of BlackRock, CIT Lending Services Group, Five Mile Capital and Column Financial; securing a five-year extension of the senior debt; eliminating over $70 million in guarantees and transforming the entire project to being off-balance-sheet.

Jonathan Geanakos, Managing Director of Houlihan Lokey, advised AFI USA on the restructuring.

According to Marin, the financial restructuring of this property will result in a write-back of $370 million to the equity of AFI USA.

“This sets us on a course of renewal and success for our company, for our partners going forward, and for the Times Square Building,” Marin says.

AFI USA’s original plans after acquiring the building in 2007, called for the 365-foot tall building to offer 622,000 square feet of office space and 128,000 square feet of retail space.

The new plans call for an increase in retail space from 17% to over 38% of the total square footage.

In addition, AFI USA will sell or lease seven floors totaling approximately 330,000 square feet to a hotel operator for a high-end hotel property; and redevelop the remaining four top floors into a select number of luxury condominium penthouse residences.

The Times Square Building will offer exclusive landmarked signage opportunities.


“We believe in this project and are confident that the new leadership of AFI USA will bring the project to a successful completion,” says James G. Glasgow Jr.,  (bottom right photo)  a Partner of Five Mile Capital. “We are glad to be a partner in a redevelopment that offers so much unique value, even in a challenging real estate market.”

Glasgow says the new Times Square Building will meet the needs of Times Square’s most ardent users: the over 37.6 million tourists who visit each year.

The property’s location – just 500 feet from where the ball drops each New Year’s Eve and across from Broadway’s Schubert Alley  (bottom left photo) – makes it attractive to many restaurateurs and retailers, Glasgow says.


This, in combination with its unique architectural features – historic fa├žade, high-ceilings, and oversized windows – and access from 43 rd and 44 th Streets, makes it an ideal hotel asset, he adds.

Marin says the retail space at the Times Square Building is already 55-percent leased in two deals totaling 134,000 square feet.

The first deal, with Discovery Times Square Exhibitions, occupies the sub-lower, lower and ground floors, and houses traveling exhibitions such as Titanic, the Artifact Exhibition and King Tut.

The second transaction, with the operator of Bowlmor Lanes, will offer bowling, entertainment and seven separate dining/bowling areas (fashioned after iconic New York neighborhoods) on floors three and four.

AFI USA’s plans call for the hotel to occupy floors five through 11 of the property.

The sky lobby, with double-height ceilings and arched windows, will be reached from its own entrance and elevator bank.


In addition to the 397 oversized hotel rooms, the property can deliver a spa, gym (complete with pool), restaurant and other amenities.

Marin says AFI USA will sell or lease this space to a hotel operator, and is currently in negotiations with a number of interested parties.

The final portion of the repurposing of the Times Square Building is the redevelopment of floors 12 through 16 into approximately 26 luxury condominium residences, and the marketing of the property’s grandfathered rooftop signage rights.

REITs Return 19.73% in First 11 Months of 2009, Fidelity Reports


BOSTON, MA—Despite a dark cloud hovering over the commercial real estate scene these days, Boston-based Fidelity Investments advises investors not to count this sector out of the trading arena.

Especially Real Estate Investment Trust stocks.

In its annual year-end review, Fidelity states, “Given that real estate was at the epicenter of last year's economic meltdown, it may surprise you that many real estate stocks have rebounded this year.

“The FTSE NAREIT All REITs Index, which represents the full universe of U.S. publicly traded real estate investment trust (REIT) stocks, had returned 19.73% year to date, as of November 30, 2009.”

"In my opinion, the year-to-date rebound has been mostly due to the realization that we're probably not going into the Great Depression, part two, and that most public commercial real estate companies are not going bankrupt," says Mark Snyderman,  (top right photo) manager of Fidelity Real Estate Income Fund (FRIFX).


"As a result, in my opinion real estate stocks have gone from being undervalued to being roughly fairly valued."

Because of this, Fidelity believes that, despite today's challenging economic conditions, some exposure to the $2.25 trillion commercial real estate sector still has potential long-term benefits for investors with a diversified portfolio.

Here is Snyderman’s full analysis of the REIT investment market:

What are REITs?

REITs are companies that invest in commercial real estate including office buildings, shopping centers, apartment complexes, and hotels. REITs qualify for special tax treatment that may help them generate a more attractive yield compared with a typical corporate stock.

To maintain its special tax status, a REIT must meet numerous requirements. Two of the main requirements are that, in general, a REIT must hold 75% of its assets in certain types of real estate assets, and 75% of its gross income must come from specified real estate investments and activities (such as rents and mortgages).


In addition, a REIT generally must distribute 90% of its taxable income to shareholders in the form of dividends.

There are two broad categories of REITs: equity, which own properties that seek to generate revenues from leases and rents; and mortgage, which seek to generate revenues by lending money to real estate investors or by purchasing existing mortgages and mortgage-backed securities.

Various pension funds, university endowments, and other institutional investors have long allocated a portion of their portfolios to commercial real estate investments. How?

In some cases by directly buying buildings, and in others, by buying the stocks of REITs, bonds issued by REITs, and commercial mortgage-backed securities.


Challenges in today's market

When the residential housing market bubble began to deflate in 2007, the commercial real estate market still managed to perform relatively well.

This is partly because the supply/demand cycles are quite different between residential and commercial property.

After Lehman Brothers collapsed last fall, however, the ensuing financial panic spread to the commercial real estate market. As a result, the FTSE NAREIT All REITs Index plunged 37% in 2008.


Since then, the weak economy has led to rising vacancy and loan default rates, and many REITs have reduced their dividend payments. While REIT stocks and bonds have rebounded off the market lows of last March 2009, the sector still faces several challenges.

"When you look at the fundamentals, they've been weak," says Snyderman. "There has been less demand for commercial property space, so vacancies have been increasing across all property types.

" This means that rents have been going down. When all is said and done, on average I would expect cash flows for commercial properties to decline 10% to 15%."

While commercial real estate cash flows are falling, Snyderman notes that commercial property values have declined much more, in many cases by about a third from their peak in late 2007.


This is because investors are less willing to pay as high a premium for certain types of commercial property as they had in the past, due to the level of uncertainty surrounding the future cash flows these properties can generate.

In the period leading up to the 2008 credit crisis, owners of commercial real estate were able to acquire and finance properties using low-cost debt.

The recent stress in the financial system has resulted in a sharp contraction in the availability of debt financing, placing additional pressure on property values.

Highly-leveraged owners have struggled to refinance maturing debt, leading to loan defaults on a number of well-known properties. It's likely that lenders will continue to experience deterioration in the credit quality of their commercial real estate portfolios in the near-term.

However, Snyderman feels that the decline in commercial property values is nearing an end for five reasons.

 "First, capitalization rates, the ratio between a property's net operating income and its market value, which have an inverse relationship to property prices, are 8%-9%—roughly in the vicinity of their long-term average.


· Second, while REIT fundamentals are still weakening, I believe that this is already priced into the market.

· Third, from the research I've done, it appears to me that there is some pent-up demand for commercial real estate property—money is on the sidelines and is waiting to be put to work.

· Fourth, the overall economic backdrop appears to be improving, which will certainly help this sector, among others.

· And last, the new supply situation is currently favorable.

New construction in the commercial real estate space has been below levels that would seem reasonable to accommodate the combination of future economic growth and the replacement of old and out-of-date buildings.


When you take a look at all of these factors working together, it tells me that we're close to the bottom," he explains.

(Wall and Broad Streets, New York City,  middle right photo)


· As well as being cautiously optimistic in the short term, Snyderman believes that the long-term outlook for commercial real estate remains similarly positive.

· From a balance-sheet perspective, even though cash flows are down, many REITs haven't borrowed beyond their means. In addition, many have adequate amounts of cash on hand, which may help them withstand the lingering effects of the credit crisis.

· Furthermore, some REITs raised significant amounts of capital in 2009 through public debt and equity markets.

· Finally, Snyderman thinks that most REITs will be able to refinance their long-term debt over the next few years, and while future loan terms may be more expensive, he believes these expectations are already included in current REIT valuations.


· From an overall supply/demand perspective, construction of new commercial property has come to a virtual standstill. With little new supply coming on the market, he thinks lease rates could rebound nicely when economic growth resumes and demand for commercial space rebounds.

Potential investor benefits

While the recent woes of the real estate sector may cause investors to question the outlook for REITs, we believe that an investment in commercial real estate for the long term provides an opportunity for capital appreciation, as well several other benefits, including:

Attractive yields. Because they are required to pass on at least 90% of their taxable income through dividends, REIT stocks and bonds have historically offered attractive yields.

In late 2008 and early 2009, however, most REITs made significant cuts to their stock dividends. Despite these cuts, REIT equities yielded an average of 3.9% as of November 30, 2009.1


"The questions for equity REIT investors now is: Will these companies go back to raising their dividends, and what are they going to do with extra cash they're keeping?" says Snyderman.

Diversification.

Historically, the performance of REIT stocks has not been closely correlated with the U.S. stock market. Correlation measures the performance of two investments and the degree to which they move in the same—or opposite—direction. Correlation values range from -1 to +1, and the lower the value, the higher the degree of diversification.

As an example, for the 20-year period ended September 30, 2009, the average correlation of the S&P 500® Index and FTSE NAREIT ALL REIT Index was 0.53.

More recently, however, for the three years ending September 30, 2009, the correlation has been 0.83, the highest level in history.



While REIT stocks may move in synch with stocks over the near term, "I believe that as the market continues to recover from the 'Great Recession,' correlations will revert to their historic norms," notes Snyderman.

Potential inflation protection.

Because commercial real estate is a tangible, hard asset, it can provide a degree of protection against rising inflation, as inflation increases the cost of constructing new buildings, making existing buildings more valuable.

In addition, many retail and office leases include automatic rent escalation clauses that protect property owners during the term of the lease. Apartment leases are usually for shorter terms and don't include such clauses. However, property owners may be able to raise rates between leases to keep pace with inflation.

REIT risks

Real estate is a cyclical industry that is sensitive to interest rates, economic conditions (both nationally and locally), property tax rates, and other factors. In addition, general risks (such as issuer risk, volatility, etc.) associated with stocks and bonds can also apply to the stocks and bonds of REITs.

Some REITs invest in foreign markets, which can be more volatile than U.S. markets due to increased risks of adverse issuer, political, regulatory, market, or economic developments.

Real estate funds are often nondiversified, meaning they can invest a greater portion of assets in securities of a small number of individual issuers. As a result, changes in the market value of single investment can cause greater price fluctuation than would occur in a more diversified fund.

How to invest

· Sophisticated and risk-tolerant investors might be interested in individual REITs if they're comfortable analyzing cash flows and risks.

· Most investors looking for exposure to commercial real estate may want to consider a diversified mutual fund or exchange-traded fund (ETF) that invests in REITs.


· Many of these vehicles focus exclusively on REIT stock investments, while a smattering may also include REIT bonds and other real estate-related securities in their portfolios.

· Be sure to check the prospectus for more information on a fund's or ETF's specific strategy.

· Also note that real estate investments are intended as a supplement to your investment portfolio, not as a core holding.