MARK HESCHMEYER, EDITOR OCTOBER 25, 2012 WWW.COSTAR.COM
A WEEKLY NEWSLETTER FOCUSING ON CHANGING MARKET CONDITIONS, COMMERCIAL REAL ESTATE, MORTGAGES AND
CORPORATIONS PUBLISHED BY COSTAR NEWS
IN THIS WEEK'S ISSUE:
Bankers Give 6 Reasons To Shop for a CRE Loan Now; 2 Reasons Not To .................................................................................... 1
QE3: A Sequel That Seems To Be Living Up to the Original's Expectations ..................................................................................... 5
FINRA Slaps REIT Fundraiser with Fines, Sanction ......................................................................................................................... 8
Watch List: $742 Mil. Office Loan Transfers to Special Servicing ................................................................................................... 10
Univ. of Phoenix Closing 115 Schools and Campuses .................................................................................................................... 10
AMD Cutting Staff, Consolidating Locations .................................................................................................................................... 11
Hartmarx Parent Goes into Chapter 11 Alteration ........................................................................................................................... 11
Back Yard Burgers Closes 19 Locations; Will Seek Concessions on Others .................................................................................. 11
Closures & Layoffs .......................................................................................................................................................................... 12
Macerich To Buy Pair of Malls for $1.25 Bil. .................................................................................................................................... 13
FDIC Sells Oaktree a Pool of $166 Mil. in CRE Loans .................................................................................................................... 14
Regulators Close Three Banks; 2 in Florida, 1 in Missouri .............................................................................................................. 14
Popeyes To Pop Up in Minnesota, Northern California ................................................................................................................... 15
Bankers Give 6 Reasons To Shop for a CRE Loan Now; 2 Reasons Not To
Third Quarter Bank Earnings Reports Clear Up Picture of Commercial Real Estate Conditions
The second week after the end of quarter is always a revealing time for commercial real estate. That's when
many of the nation's largest bank holding companies go live to discuss their earnings, and how their CRE lending
is faring. In this latest go-around, the bank executives provided the clearest picture of CRE conditions that they
have in a long time.
As we do each quarter, we present the most telling statements regarding bank CRE-related activities from the
presentations we heard:
• For major banks, the recession is receding further and further away in the rearview mirror.
• Provisions for loan losses are falling, which means banks have more money available to lend.
• The disposition values of foreclosed assets are increasing, so banks plan to make more property
available for sale.
• Many banks have cleared through their distressed assets and are ready to start growing again.
• They see demand in the marketplace increasing.
• There is pressure on pricing as competition for loans heats up.
• However, lenders view CRE as still inherently risky, but federal banking policies are mitigating the risks,
• Conditions will continue to get better, as long as we don't go over the 'fiscal cliff.'
We'll take you through each point and tell you who said what.
RECESSION IN THE REARVIEW MIRROR
"If [you] step back a little bit, a couple issues are encouraging. First of all, real estate is getting better. We saw it
in housing a year ago and every quarter, we have more confidence. We're not back to where we need to be and
it's not as robust as we all want to be, but that's good on the repurchase side as values go up. And secondly, we
continue to get further and further away -- or it's within a rearview mirror, the 2006 and 2008 portfolio."
John G. Stumpf, chairman, president and CEO of Wells Fargo & Co.
THE WATCH LIST NEWSLETTER 1
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FALLING PROVISIONS FOR LOAN LOSSES
"We could certainly envision more zero [dollar] provision quarters going forward. So long as we have healthy
coverage of our non-performers and we see a continued decrease in classified assets, our methodology really
kind of drives down the required reserves and we think it will go that way. So I would anticipate that that would
be the case going into at least early 2013."
Kim R. Bingham – executive vice president and chief credit officer for Cathay General Bancorp
GETTING NEAR BOOK VALUE FOR REO
"I'm particularly encouraged with the drop in OREO expenses to nearly zero and while this may not be sustained,
there is a positive trend in collateral values within many of our markets, which is leading to gains on sale of some
of our foreclosed real estate that are relative to book values."
Harris H. Simmons, chairman, president and CEO of Zions Bancorp.
"Other real estate was flat at $77 million during the quarter with $11 million in additions largely offset by $9
million in sales. For the first time since the financial crisis, sales proceeds exceeded book value as we have seen
a shift from often receiving lowball offers for real estate holdings to bids above our book balance on occasion.
Repossessed land is held at 17% of original appraisal and improved property is held at 40%."
Dale M. Gibbons, executive vice president and chief financial officer of Western Alliance Bancorp.
ABLE TO START GROWING
"For the first time in several quarters we've seen growth in commercial real estate. We shaped that business
down when things got tough to a level we thought made sense from a risk perspective. And we are now in a
position to be able to start growing that. While we're focused on doing things with our customers, we've seen one
or two portfolios, not huge size, that have come up that we've been able to bring in. When we do that, the first
thing that we look at in those portfolio are how much of the exposure of the portfolios to people that we do
business with and we'd like to do more [with]. We've had a couple situations where we've been able to bring
those portfolios in and become more significant with clients that we want to become more significant with."
Bruce R. Thompson, chief financial officer of Bank of America Corp.
INCREASE IN DEMAND
"We are beginning to see fair amount of activity -- more than people just nibbling around the edges from a
transaction standpoint. There remains a big segment of resort and hotel inventory that was moved to problem
loan status through the crisis that will represent future opportunity as we move forward as those assets reprice.
We think that commercial lending represents a pretty good opportunity for us moving forward.
Peter S. Ho, chairman, president and CEO of Bank of Hawaii Corp.
"Another thing to think about is 75% of our mortgage volume this past quarter was refinance and 25% was
purchase money; that's still a very low overall purchase money market. As we see real estate continue to
improve as refis ebb, we might see the purchase volume pick up. Furthermore, as the purchasing volume or if
rate rise and those things slow down, then the servicing (asset becomes) more valuable.
Timothy J. Sloan – senior executive vice president and chief financial officer of Wells Fargo & Co.
Our "largest increase in loans came in our commercial real estate portfolio, which increased 6% from June 30,
2012. We have seen a considerable increase in commercial real estate refinancing activity, as borrowers are
looking to lock-in lower interest rates before they inevitably start to rise again."
Alvin D. Kang, CEO of BBCN Bancorp Inc.
"There are in abundance of stabilized properties that need refinancing and there are fewer lenders that have
returned to these markets and those that are active seem to be showing quite a bit of discipline in structures and
Richard D. Fairbank, chairman, CEO and president of Capital One Financial Corp.
THE WATCH LIST NEWSLETTER 2
PRESSURE ON PRICING
"Particularly at the commercial real estate side, the life [insurance] companies have come back into play along
with the (conduits) are actually slowly coming back into play as an alternative. And that puts a little bit of pressure
on pricing. Overall while I would expect the competition to be very aggressive, it hasn't been too bad relative to
what we've seen in the past."
Rene F. Jones, executive vice president and chief financial officer of M&T Bank Corp.
"The larger loans are coming under more significant competitive pricing pressure than smaller balance loans as
you might imagine. The one impact that was more significant than we had expected this quarter quite frankly was
the compression we got out of maturing loans and the compression we got out of loans that were repriced of
maturity, were fairly equal."
William Lloyd Prater, treasurer and chief financial officer of BancorpSouth Inc.
"The market pressures are having an impact, there's no doubt about that, especially in more of the commodity
driven deals. So, if you are going out to the market to finance a fully stabilized leased apartment complex, we are
not competing for that. If you're going out to the market to finance a fully leased 100% stabilized anchored retail
center, we're not competing for that. We are in the value-add business, we want our customers to pay us for our
relationship, the level of service, what we're doing and so we can't compete in everything."
Robert G. Sarver, chairman and CEO of Western Alliance Bancorp.
STILL INHERENTLY RISKY
"My personal view is that more so than any big change in the inherent loss on portfolio is the effect that
delinquencies overall in the United States are on real estate and delinquencies specifically on residential
mortgages are really, really high still. Why you're seeing improvement, is because the underlying rate
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environment which is really being stimulated by the Fed and the policies. So we believe there really hasn't been
a big change in the inherent risk in the portfolios. We remain cautious as we kind of look at the underlying
portfolio, but obviously things are pretty stable.
Rene F. Jones, executive vice president and chief financial officer of M&T Bank Corp.
"Going forward, we expect commercial real estate loans to continue to decline … the current uncertain economic
environment does bear on demand for new loans, and we intend to continue to exercise relationship pricing
Karen L. Parkhill, chief financial officer and vice chairman Comerica Inc.
"I think you would see our company growing the [CRE] book 6% to 7% on an annualized basis up until now and I
think I'm going to guide you down to 4% to 6% in the next quarter and until we know what happens after the
elections, fiscal cliff. We don't want to go too far out when there's too many variables. I do think that it's
(emblematic) that with customers feeling less comfortable I think it makes sense too. I wish it was higher, but I
think it makes sense, because you've got the near-term election uncertainty, you've got the fiscal cliff uncertainty,
you've got the European recession, you've got the economy, and all those are not going to be solved imminently,
but they are going to solved eventually. So I'm going to be pleased with 4% to 6% annualized [growth]. We'll take
anything we can get above that. Commercial is a great proxy for I think sentiment and while it's still growing
nicely, people are getting more lines than they are using and they are still not using the lines they have. So I
think that uncertainty reminds us that there is still plenty of pent-up possibility."
Richard K. Davis, chairman, president and CEO of U.S. Bancorp
QE3: A Sequel That Seems To Be Living Up to the Original's Expectations
As the presidential campaigns began their home stretch following Labor Day weekend, it wasn't surprising that
people in some camps dismissed the Federal Reserve's decision to initiate a third round of quantitative easing
(QE3) as political hocus pocus.
One month in, though, it appears the latest round of stimulus is sparking some expected and unexpected good.
Under the September plan, the Federal Reserve agreed to purchase additional agency mortgage-backed
securities at a pace of $40 billion per month. And, if the outlook for the labor market does not improve
substantially, the Fed said it would continue that level of purchasing, or perhaps even increase it, until
"improvement is achieved in a context of price stability."
At the time, John O'Callahan, capital markets strategist for CoStar Group's PPR, noted that, coming on top of the
Fed's existing purchases, QE3's incremental ongoing flow of $40 billion per month is pretty significant.
"It looks to be between 25%-30% of monthly new issuance, on average (and over 50% when combined with
existing purchases), assuming refi volume continues to be strong in the future, which means the Fed will crowd
out other investors such as some mortgage REITs," Callahan noted.
And that is what the market is seeing, according to Marielle Jan de Beur, managing director CMBS and Real
Estate Research at Wells Fargo Securities. The Fed's mortgage purchases are displacing private mortgage
investors in the residential mortgage-backed securities market.
"Putting QE3 into perspective, the Fed's $60.65 billion of gross mortgage purchase commitments amounted to
roughly 50% of the gross agency MBS new issuance for the month of September," Jan de Beur reported. "On
the other hand, the Fed's demand accounted for nearly 20 times the net supply of $3.07 billion for the month."
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ZE THEORY OF DISPLACEMENT, IS ZIS FAMILIAR?
(As this is Halloween week, you Addams Family fans will understand that header.)
And where did all those displaced residential buyers go? Interestingly, they began showing up in the CMBS
"The displacement of private investors in the mortgage market means that other markets, such as CMBS, are
likely to continue experiencing spillover demand as long as QE3 remains in effect," Jan de Beur said.
"Since mid-July, the credit curve for 2012 vintage CMBS has flattened 165 basis points, as measured by the
spread between Aaa rated A-S tranches and Baa2 tranches," she added. "The Fed's mortgage purchases are
programmatic, and the effect is likely to be ongoing. For CMBS, we believe the implication is a further decline in
the steepness of the credit curve."
And finally, "Because new issue Baa tranches face less uncertainty regarding upcoming bank capital and
insurance company risk-scoring changes than legacy securities, yield buyers may focus on this segment and
spreads may continue to tighten, in our view."
CoStar's O'Callahan said it appears that QE3 is impacting some areas a lot more than others.
"CMBS continues to benefit while the boost to equities is beginning to falter already. With the extreme tightening
of Agency-backed RMBS spreads resulting from QE3, the scramble in the search for yield has become even
more frenzied - hence the rapid CMBS spread tightening over the past month," O'Callahan said.
"It's not a surprise to us that investors have found value in CMBS," he added. "We pointed out the attractive
relative value at our client conference prior to QE3. However, the speed at which spreads have tightened is
The supply-demand imbalance is probably a key factor in the rapid price appreciation, he said, as those
investors holding quality CMBS bonds don't want to part with them for the lack of anything else to buy with the
proceeds in this environment.
A STRONG AIR COMPRESSOR
"In light of the Fed's ongoing actions, CMBS still appears to be relatively attractive and investors will likely
continue to push spreads even tighter, especially down in credit," O'Callahan said. "We expect supply to
continue to remain constrained, although at some point it will make economic sense for some holders to sell and
As with any investment though, high prices doesn't mean risk is lower. In fact, risk may be higher now,
O'Callahan said. With record price levels and low yields across many asset classes today, it's appropriate to
question if the risk-reward proposition is out of whack, maybe even reflecting the formation of a bubble.
"We had a discussion about "bubbles" at our client conference and only a few in the audience of roughly 100
senior investment and risk managers raised their hands when asked if there may be bubbles forming as a result
of the Fed's actions. It was surprising that only a few hands went up," he said. "The combination of cheap
funding, leverage, a herd-like mentality, and excessive government manipulation makes for a strong air
compressor from which to blow bubbles."
And an abrupt shift in sentiment can be enough to pop a bubble, if one exists.
"What will happen if investors' expectations regarding the Fed's future actions change abruptly, say under a
Republican administration, for example?" O'Callahan asks. "Investors should be assessing the possible impacts
of various scenarios playing out."
THE WATCH LIST NEWSLETTER 7
FINRA Slaps REIT Fundraiser with Fines, Sanction
The Financial Industry Regulatory Authority (FINRA) ordered David Lerner Associates Inc. (DLA) of Syosset, NY,
to pay $12 million in restitution to affected customers who purchased shares in Apple REIT Ten, a non-traded $2
billion real estate investment trust (REIT) DLA sold, and to customers who were charged excessive markups.
As the sole distributor of the Apple REITs, DLA solicited thousands of customers, targeting unsophisticated
investors and the elderly, selling the illiquid REIT without performing adequate due diligence to determine
whether it was suitable for investors, according to FINRA.
To sell Apple REIT Ten, DLA also used misleading marketing materials that presented performance results for
the closed Apple REITs without disclosing to customers that income from those REITs was insufficient to support
the distributions to unit owners, FINRA found.
FINRA also fined DLA more than $2.3 million for charging unfair prices on municipal bonds and collateralized
mortgage obligations (CMOs) it sold during a 30 month period, and for related supervisory violations.
In addition, FINRA fined David Lerner, DLA's founder, president and CEO, $250,000, and suspended him for one
year from the securities industry, followed by a two-year suspension from acting as a principal.
According to FINRA, David Lerner personally made false claims regarding the investment returns, market values,
and performance and prospects of the Apple REITs at numerous DLA investment seminars and in letters to
customers. To encourage sales of Apple REIT Ten and discourage redemptions of shares of the closed REITs,
he characterized the Apple REITs as, for example, a "fabulous cash cow" or a "gold mine," and he made
THE WATCH LIST NEWSLETTER 8
unfounded predictions regarding a merger and public listing of the closed Apple REITs, which he inappropriately
claimed would result in a "windfall" to investors.
Joseph C. Pickard, senior vice president and general counsel for David Lerner Associates, issued the following
"In the last few years, David Lerner Associates has been forced to deal with several FINRA regulatory matters
that have been very costly to defend and very distracting to the firm's efforts for its clients. David Lerner and the
management of David Lerner Associates have decided it is time to move the company past these distractions
and settle with the regulators. As part of that settlement, David Lerner will be stepping aside temporarily from
David Lerner Associates for the next year."
"In his absence, David Lerner Associates will move forward under the day-to-day management of its experienced
executive and management teams led by John Dempsey, a thirty-three year veteran of the firm. Although David
Lerner is stepping aside temporarily, he will become more involved with other non-broker/dealer business
enterprises that have been developed over the years, such as the Spirit of America Mutual funds."
David Lerner Associates continues to raise capital for Apple REIT Ten and other affiliated Richmond, VA-based
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Watch List: $742 Mil. Office Loan Transfers to Special Servicing
Information for these lead listings was provided by CoStar Group and Trepp LLC, an industry leader in providing surveillance
data on loan and commercial real estate performance underlying the CMBS market.
Fitch Ratings downgraded seven classes of Bear Stearns Commercial Mortgage Securities Trust, series 2007-
PWR17 commercial mortgage pass-through certificates, following the transfer of a $741.9 million loan into
The downgrades are due to increased loss expectations, primarily associated with the specially serviced loans.
The largest contributor to Fitch expected losses is the largest loan (8.96%), DRA/Colonial Office Portfolio. The
interest-only loan is secured by 19 office properties that comprise 5.2 million square feet in six metropolitan
statistical areas primarily in the South and Southeast.
The loan is split into three equal pari passu notes. The loan transferred to special servicing in August 2012 for
imminent default due to declining occupancy and significant rollover before its 2014 maturity of 26%.
Most of the properties are located in secondary and tertiary markets where market rental rates have dropped
significantly lower than in-place rents, which are expected to have substantial impact on the property's cash flow.
C-III Asset Management, the special servicer, reports that the property's occupancy was 79.1% as of September
Property Address City State SF
300, 400, 701, 801, 901 & 1001 International
Heathrow Inter. Business Ctr. Pkwy Lake Mary FL 835,201
CC at Town Park 100, 200 & 300 Colonial Center Pkwy Lake Mary FL 458,259
CC at Colonnade 3500, 3700 & 3800 Colonnade Pkwy Birmingham AL 419,387
Colonial Place I & II 4300 & 4350 Cypress St. Tampa FL 371,473
Research Office Park 12301-4 Research Blvd., Buildings III & IV Austin TX 357,689
Peachtree Street 1355 Peachtree St. NE Atlanta GA 309,625
Riverchase Center 2100, 2200 & 2300 Riverchase Center Birmingham AL 306,143
Concourse Center 3501, 3503, 3505 & 3507 Frontage Road Tampa FL 294,369
CP Town Park Combined 950 Market Promenade Ave. Lake Mary FL 237,191
Colonial Center at Bayside 17757 US Highway 19 North Clearwater FL 212,882
International Office Park 1800 & 1900 International Park Drive Birmingham AL 210,984
Esplanade 2101 Rexford Road Charlotte NC 202,817
CC at Town Park 600 600 Colonial Center Parkway Lake Mary FL 199,585
Colonial Plaza 2101 6th Ave. North Birmingham AL 170,850
Colonial Center at Blue Lake 3500 Blue Lake Drive Birmingham AL 166,590
Maitland Office Building 901 Lake Destiny Drive Maitland FL 155,730
Shops at Colonnade - Retail 3409-3443 Colonnade Pkwy Birmingham AL 125,462
One Independence Plaza One Independence Drive Birmingham AL 106,216
HIBC 1000 Building 1000 Business Center Drive Lake Mary FL 87,066
Univ. of Phoenix Closing 115 Schools and Campuses
Apollo Group Inc., the Phoenix-based owner of the for-profit University of Phoenix chain of colleges, plans to
shutter115 locations as part of its plan to "re-engineer business processes and refine its delivery structure."
The closures will consist of 90 learning and student resource centers, which are generally smaller satellite
locations, and 25 of its campuses.
The company has also begun implementing a workforce reduction and expects to decrease total headcount,
excluding faculty, by 800 employees during fiscal year 2013.
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The changes will directly impact 13,000 students. These students will be offered support to continue their
education at the University of Phoenix either online, through alternative on-ground arrangements or, in limited
cases, at other University of Phoenix locations.
The plan will preserve a national coast-to-coast network of 112 locations in 36 states, the District of Columbia
and Puerto Rico.
AMD Cutting Staff, Consolidating Locations
AMD (Advanced Micro Devices) has launched a restructuring plan designed to reduce operating expenses. A
significant portion of Sunnyvale, CA-based AMD's restructuring plan that will be implemented in next two months
will include a 15% global workforce reduction and site consolidations. At February 2012 employment levels, a
15% reduction would entail about 1,665 workers.
Rory Read, AMD president and CEO, said the changes were needed because of the significant changes roiling
the PC industry. "It is clear that the trends we knew would re-shape the industry are happening at a much faster
pace than we anticipated," Read said. "As a result, we must accelerate our strategic initiatives to position AMD to
take advantage of these shifts and put in place a lower cost business model. Our restructuring efforts are
designed to simplify our product development cycles, reduce our breakeven point and enable us to fund
differentiated product roadmaps and strategic breakaway opportunities."
Hartmarx Parent Goes into Chapter 11 Alteration
The buyer of the retailer / apparel firm formerly known as Hart Schaffner & Marx and then Hartmarx Corp. itself
filed for bankruptcy protection this week, which means now both the buyer and the bought are operating under
Chapter 11 reorganization.
Privately-held HMX Acquisition Corp., and four affiliates including Quartet Real Estate LLC, filed for Chapter 11
protection with the U.S. Bankruptcy Court in the Southern District of New York. In its filing, HMX is seeking a sale
of the business.
The company designs, manufactures and retails men's and women's business and leisure apparel and claims to
be the largest manufacturer of men's tailored clothing.
In January 2009, Hartmarx Corp., HMX's predecessor in interest, filed for chapter 11 bankruptcy protection. In
the summer of 2009, HMX acquired its existing equity ownership against the backdrop of a U.S. recession, a
difficult retail environment, and a need to improve Hartmarx's operations.
New senior management was recruited and immediately began implementing a comprehensive operational
turnaround focused on: a reconfigured growth strategy; brand revitalization and new product initiatives;
streamlined operations; and centralized non-manufacturing operations.
In the first half of this year, HMX implemented additional cost savings, including headcount reductions and
curtailment of marketing expenditures and sought a debt restructuring. When debt talks fell through in July, HMX
curtailed all inventory purchases.
As talks broke down, debt holders began shopping the business. And as part of its bankruptcy reorganization,
HMX has entered into a 'stalking horse' asset purchase agreement with Authentic Brands Group for a going
Back Yard Burgers Closes 19 Locations; Will Seek Concessions on Others
Back Yard Burgers Inc., a Nashville-based regional quick service restaurant chain, plans to reduce operating
expenses and restructure debt. Part of the plan calls for addressing underperforming locations.
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The company filed a pre-negotiated Chapter 11 reorganization plan with the U.S. Bankruptcy Court for the
District of Delaware. The filing does not include franchise-owned locations. Having already obtained the consent
of its secured lender, the company anticipates the restructuring process will be completed in early 2013.
Back Yard Burgers previously closed 19 company-owned locations due to underperformance and prohibitive
costs, and it has hired GA Keen Realty to review its locations and initiate discussions with landlords regarding
rent reductions, lease term modifications and other leasehold concessions.
Closures & Layoffs
Closure Layoff Impact
Company Address City State or Layoff Number Date
Curesearch for 440 E. Huntington Drive, Suite
Children's Cancer 40 Arcadia CA Closure 85 10/31/2012
Lovin Oven 16100 Foothill Blvd. Azusa CA Layoff 571 10/31/2012
Seven Oaks Country
Club 2000 Grand Lakes Ave. Bakersfield CA Layoff 73 10/31/2012
Pacific Steel Casting
Co. 1333 Second St. Berkeley CA Layoff 135 11/15/2012
VWR International 3745 Bayshore Blvd. Brisbane CA Closure 30 11/9/2012
Albertsons 1000 N. Azusa Ave. Covina CA Closure 61 11/4/2012
River Ranch Fresh
Foods 175 N First St. El Centro CA Closure 459 11/24/2012
San Diego Union-
Tribune 207 E.Pennsylvania Ave. Escondido CA Layoff 46 11/30/2012
Wind Towers Division 13032 Slover Ave. Fontana CA Closure 180 11/24/2012
Albertsons 13220 Harbor Blvd. Grove CA Closure 61 11/4/2012
Albertsons 1000 S. Central Ave. Glendale CA Closure 54 11/4/2012
Albertsons 17120 Colima Road Heights CA Closure 57 11/4/2012
Teva Pharmaceuticals 19 Hughes Irvine CA Layoff 65 10/29/2012
World Marketing 14407 Alondra Blvd. La Mirada CA Closure 80 11/26/2012
3055 Comcast Place (Bldgs A &
Comcast B Livermore CA Closure 435 11/30/2012
National Laboratory 7000 East Ave. Livermore CA Layoff 205 11/15/2012
Corp. 11999 San Vicente Blvd. Los Angeles CA Closure 42 11/28/2012
Albertsons 11875-A Pigeon Pass Road Valley CA Closure 57 11/4/2012
Comcast 18665 Madrone Parkway Morgan Hill CA Closure 220 11/30/2012
Paragon Studios 2189 Leghorn St. View CA Closure 79 10/31/2012
Savi Technology 351 & 381 East Evelyn Ave. View CA Layoff 54 11/17/2012
Albertsons 1100 N. Hammer Ave. Norco CA Closure 55 11/4/2012
Disney Interactive 5161 Lankershim Blvd. Hollywood CA Layoff 99 11/5/2012
San Diego Union-
Tribune 1722 South Coast Hwy Oceanside CA Layoff 19 11/30/2012
Albertsons 2522 S. Grove Ave. Ontario CA Closure 52 11/4/2012
Codexis 200 Penobscot Drive City CA Layoff 133 10/30/2012
Albertsons 8310 Limonite Ave. Riverside CA Closure 59 11/4/2012
Albertsons 19725 E. Colima Road Heights CA Closure 61 11/4/2012
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Closure Layoff Impact
Company Address City State or Layoff Number Date
Comcast 4450 East Commerce Way Sacramento CA Closure 410 11/30/2012
La Hacienda Farms 1119 Rogge Road Salinas CA Closure 96 11/30/2012
SVTC Technologies 3901 North First St. San Jose CA Layoff 106 11/17/2012
Carey Limousine 441 Voctory Ave., Unit C, 2nd Flr Francisco CA Layoff 54 11/16/2012
Elan Pharmaceuticals 180 Oyster Point Blvd. Francisco CA Layoff 202 11/20/2012
Rambus 1050 Enterprise Way, Suite 700 Sunnyvale CA Layoff 68 10/30/2012
Aero-Electric 568 Amapola Ave. Torrance CA Closure 23 11/23/2012
Ricoh 1123 & 1132 Warner Ave. Tustin CA Closure 95 11/30/2012
Albertsons 7227 Van Nuys Blvd. Van Nuys CA Closure 69 11/4/2012
First American Home
Corp. 7833 Haskell Ave. Van Nuys CA Layoff 62 11/9/2012
Albertsons 13650-A Bear Valley Road Victorville CA Closure 62 11/4/2012
Albertsons 18730 E. Amar Road Walnut CA Closure 55 11/4/2012
Medpoint Management 6400 Canoga Ave. Hills CA Closure 65 11/30/2012
Rideout Home Health 939 Live Oak Blvd. Yuba City CA Layoff 44 11/11/2012
Macerich To Buy Pair of Malls for $1.25 Bil.
By: Justin Sumner
Vornado Realty Trust agreed to sell its Green Acres Mall in Valley Stream, NY to The Macerich Co. for $500
million, or about $278 per square foot.
In a separate agreement, Alexander's Inc., Vornado's 32.4% affiliate, also agreed to sell its Kings Plaza Mall in
Brooklyn, NY to Macerich for $751 million, or about $626 per square foot.
Green Acres Mall is in Long Island's southern Nassau County submarket. The 1.8 million-square-foot enclosed
mall was built in 1958 on 96 acres. The center historically enjoys high occupancy and is anchored by Sears,
Macy's, JC Penney and Kohls. Green Acres was renovated and expanded in 2007 and has 408,000 square feet
of in-line mall tenant space that includes Aeropostale, American Eagle, Forever 21, H&M and Modell's sporting
goods. The mall is 94% occupied and the mall tenant's annual sales per foot exceed $520.
Net proceeds from the sale of Green Acres Mall will be $185 million after closing costs and repaying the existing
loan, which Vornado refinanced in 2008 at $335 million. The sale will result in a financial statement gain of $195
million, and a tax gain of nearly $304 million, which is expected to be deferred as part of a like-kind exchange.
Kings Plaza Mall is in South Brooklyn near Flatbush and Avenue U. The 1.2 million-square-foot enclosed mall
was built in 1969 on 24.3 acres. It is anchored by Macy's, Sears, Best Buy and Old Navy. The mall tenant's
annual sales per square foot are $650. The center is currently 95% occupied and has an in-line tenant line-up
that includes Aeropostale, American Eagle, Armani Exchange, Forever 21, H&M, MAC, Pink, Swarovski and
The financial statement gain from the sale of Kings Plaza Mall will be $602 million with a tax gain of nearly $624
million. Vornado, for its part, will realize a financial statement gain of approximately $181 million and a tax gain of
approximately $202 million. Both group's tax gains are expected to be paid out to shareholders as a special long-
term capital gain dividend.
Commenting on the transaction, Arthur Coppola, chairman and CEO of Macerich, said: "These transactions are
consistent with our investment strategy of acquiring assets in the major markets where we have our best assets
and selling non-core assets and recycling capital. This allows us to build on our New York portfolio and will be an
excellent complement to Queens Center. At Kings Plaza and Green Acres there are substantial opportunities to
replace lower sales producing tenants with higher productivity tenants, in a manner similar to what we
accomplished after we acquired Queens Center."
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The sales of both malls are subject to customary closing conditions. Kings Plaza is expected to close in the
fourth quarter of 2012. Green Acres is expected to close in the first quarter of 2013, and is contingent on
Macerich first closing on Kings Plaza.
FDIC Sells Oaktree a Pool of $166 Mil. in CRE Loans
The Federal Deposit Insurance Corp. (FDIC) has closed on its fourth sale in its Small Investor Program, and the
winning bidder was anything but small.
The winning bid was submitted by Tennessee Loan Acquisition Venture LP (TLAV), an entity of Oaktree Capital
Management. LA-based Oaktree controls a portfolio of $78.7 billion in assets, including $5 billion in real estate
The sale involved a competitive bidding process for an equity interest in a limited liability company (LLC). The
LLC was formed by the FDIC in its receivership capacity to hold certain assets of the failed Tennessee
Commerce Bank in Franklin, TN, which was closed in January, 2012.
The FDIC placed a pool of 93 performing and non-performing commercial real estate loans, commercial
acquisition, development and construction loans and credit facilities, and performing and non-performing
residential acquisition, development and construction loans and credit facilities into the LLC. The aggregate
unpaid principal balance of the pool is $166.2 million with the highest concentration of collateral in Tennessee.
TLAV paid $23.9 million (net of working capital) in cash for its initial 25% equity stake in the LLC. TLAV will
provide for the management, servicing and ultimate disposition of the LLC's assets.
The sale was conducted on a competitive basis with 13 bids received from 10 investors. The FDIC said the bid
submitted on behalf of TLAV was determined to be the one that maximized the value of the assets to the
creditors of the Tennessee Commerce Bank receivership.
Regulators Close Three Banks; 2 in Florida, 1 in Missouri
The Missouri Division of Finance closed Excel Bank in Sedalia, MO; the Office of the comptroller of the Currency
closed First East Side Savings Bank in Tamarac, FL; and the Florida Office of Financial Regulation closed
GulfSouth Private Bank in Destin, FL. The FDIC was appointed receiver of the three failed banks with total
assets of $427 million.
The FDIC sold Excel Bank, the largest of the three banks with $200.6 million assets and four branches, to
Simmons First National Bank in Pine Bluff, AR.
The FDIC and Simmons First National Bank entered into a loss-share transaction on $126.6 million of Excel
As of June 30, Excel Bank held $11 million in foreclosed commercial real estate assets and $25.5 million in
delinquent CRE loans
The FDIC estimates that the cost to its Deposit Insurance Fund (DIF) will be $40.9 million.
In Florida, the FDIC entered into a purchase and assumption agreement with SmartBank in Pigeon Forge, TN, to
assume the four branches GulfSouth Private Bank, which had $159.1 million in total assets.
The FDIC estimates that the cost to its DIF will be $36.1 million.
Also in Florida, the OCC stepped in to close First East Side Savings with $67.2 million in total assets. The OCC
acted after finding that the institution had experienced substantial dissipation of assets and earnings due to
unsafe and unsound practices. The OCC also found that the institution incurred losses that depleted its capital,
THE WATCH LIST NEWSLETTER 14
the institution was critically undercapitalized, and there was no reasonable prospect that the institution will
become adequately capitalized.
The FDIC entered into a purchase and assumption agreement with Stearns Bank National Association in St.
Cloud, Minnesota, to assume the bank and its one branch.
The FDIC estimates that the cost to its DIF will be $9.1 million.
Popeyes To Pop Up in Minnesota, Northern California
AFC Enterprises Inc., the Atlanta-based franchisor and operator of Popeyes Louisiana Kitchen restaurants,
agreed to acquire 29 restaurants in Minnesota and Northern California for $13.8 million, about $475,862 per
restaurant from Wagstaff Management Corp.
The restaurants currently operate as another quick service restaurant concept. The company intends to convert
28 of the restaurants to Popeyes at a cost of $11.5 million. It will dispose of one of the eateries. Following the
conversion, the restaurants will be leased to Popeyes franchisees to operate.
The purchase agreement is subject to bankruptcy court approval and the acquisition is expected to close in
"The rapid opening of 28 new Popeyes restaurants will give Popeyes a major footprint in places where we
currently have almost no presence," said Cheryl Bachelder, AFC Enterprises Inc. CEO.
THE WATCH LIST NEWSLETTER 15