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VOL. 122 | NO. 170 | Monday, September 10, 2007

Daily Digest

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Site Leased to FedEx Transferred in Merger

     Properties near Memphis International Airport leased to FedEx have been quitclaimed to a New York real estate investment trust as part of a merger approved late last year.
     Lexington Realty Trust in December merged with Newkirk Realty Trust. The deal netted Lexington 18.6 million square feet in office, retail and industrial space belonging to Newkirk, bringing Lexington's portfolio to 58.9 million square feet of rentable space.
     Now, FedEx property included in the December merger has transferred from a Newkirk-affiliated entity to a Lexington entity. Newkirk JVF LP and NK-Remainder Interest LLC recently quitclaimed the property to Lexington Memphis (JVF) LP.
     In conjunction with the quitclaim, Lexington Memphis filed through KeyBank NA a $77 million loan comprised of notes in the amounts of $65.6 million and $11.4 million.
     Lexington representatives did not return calls by press time.
     The quitclaimed property included three parcels on the west side of Airways Road north of East Raines Road near Memphis International Airport.
     Documents filed with the U.S. Securities and Exchange Commission earlier this year state the FedEx-leased buildings included in the merger have 521,286 square feet of net rentable square feet. However, buildings on the quitclaimed parcels total more than 800,000 square feet, according to Memphis-based real estate information company Chandler Reports.
     In conjunction with the quitclaim, Newkirk JVF assigned Lexington a 1984 agreement leasing the property to Federal Express Corp. The lease was last amended in 2006, according to the agreement, and runs through June 2019, according to SEC filings.
     In addition to the airport-area facility, Lexington owns FedEx's 120,000-square-foot light-manufacturing facility at 477 Distribution Parkway in Collierville, a property it acquired in November 2005, according to Lexington's Web site. Other properties owned in the Memphis area are leased to Ingram Micro Inc.; Sears, Roebuck & Co.; The Kroger Co.; Hnedak Bobo; and Mimeo.com Inc., according to the site.

MAAR Confirms Commercial Council Officers

     The Memphis Area Association of Realtors (MAAR) Commercial Council last week confirmed that Steve Guinn of Highwoods Properties will serve as 2008 president. The group also elected Irvin Skopp of Belz Realty Co. as 2008 president-elect.
     Also at the council's annual meeting held last month, members elected the following as directors for 2008-2009: Dave Curran of Commercial Advisors LLC; Scott Barton of CB Richard Ellis Memphis; Lea Heilig of Woodyard Realty Corp.; and Ron Riley of In-Rel Management.
     The four will join the existing board members who will continue to serve in 2008: Bayard Snowden of Colliers Wilkinson Snowden; J. Walter Allen of Integra Realty Resources; Stan Myers of Belz Realty Co.; and Kathy Pampuro of Boyle Investment Co.
     In addition, the following chapter representatives will serve on the Commercial Council board for 2008: Mark Jenkins of Commercial Alliance Management LLC; Debra Owings of Retail Management Services; Glen Bascom of Bascom Realty; and Jim Rainer of Commercial Advisors.

Methodist Alliance Hospice Applies to Build Residence

     Methodist Alliance Hospice, a division of Methodist Le Bonheur Healthcare, has applied for a certificate of need to build a hospice residence. The residence will be a $9 million, 30-bed free-standing facility. It will be built on close to six acres on Quince Road near Kirby Road.
     The board of Methodist Le Bonheur Healthcare approved $2 million toward the project's capital campaign.
     The hospice residence will provide acute care for those who require symptom management and short-term residential beds for those who cannot be cared for in their homes. The residence also will contain office space to accommodate interdisciplinary teams of physicians, nurses, home health aides, chaplains, social workers, volunteers and support staff.

Police Association Endorses Chumney

     Memphis mayoral candidate Carol Chumney is being endorsed by the Memphis Police Association, which represents more than 2,000 police officers and sergeants.
     The endorsement was announced Thursday at the headquarters of the Memphis Police Association on Jefferson Avenue.

Employers Cut Payrolls By 4,000 Jobs

     Employers sliced payrolls by 4,000 jobs in August, the first such decline in four years and a stark sign that a painful credit crunch that has unnerved Wall Street is putting a strain on the national economy.
     The latest snapshot of the employment climate, released by the Labor Department Friday, also showed the unemployment rate held steady at 4.6 percent.
     Job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retail. Employment in financial services was flat. The weakness in payrolls reflected fallout from a deepening housing slump, a credit crisis and financial turbulence that has made businesses more cautious in their hiring.
     Economists were expecting a much stronger report. They were forecasting payrolls to grow by 110,000.
     The drop of 4,000 jobs in August was the first decline since August 2003. Payrolls fell by 42,000 at that time as the job market was still struggling to recover from the 2001 recession.
     Those with jobs, however, did see modest wage gains.
     Average hourly earnings rose to $17.50 in August, a 0.3 percent increase from July. That matched economists' forecasts. Over the past 12 months, wages are up 3.9 percent. Wage growth supports consumer spending, a major ingredient for a healthy economy. If the job markets continue to lose steam, however, wage growth will eventually slow, too, economists said.
     The modest wage growth could ease inflation fears, giving the Fed more leeway to cut interest rates.

Senate Votes to Increase College Financial Aid

     The Senate voted Friday to increase college financial aid by cutting roughly $20 billion in government subsidies to banks and giving it to students.
     The bill would boost the maximum Pell grant, which goes to the poorest college students, from $4,310 to $5,400 by 2012.
     The House was expected to vote on the bill later Friday and the president is expected to sign the legislation soon.
     The bill would cut interest rates on federally backed student loans to poor and middle-class students from 6.8 percent to 3.4 percent over the next four years.
     Democratic lawmakers say the roughly $20 billion in cuts are aimed at excessive
     government subsidies to the banks that give student loans. The subsidies were established to ensure that banks enter and stay in the college loan business.
     Banking industry officials have objected to the cuts and have said they could adversely affect services that banks provide to borrowers.
     Nearly all of the cuts would go toward making college cheaper, but $750 million
     would be spent on federal budget deficit reduction. The legislation is part of a must-pass bill needed to meet spending targets in the federal budget.

Drug Tax Unconstitutional, State Court Rules

     The state Court of Appeals has ruled Tennessee's tax on illegal drugs is unconstitutional.
     The levy known as the "crack tax" allows the state to confiscate belongings of people who haven't bought tax stamps for controlled substances, including cocaine, crack, methamphetamine and marijuana and moonshine.
     The appeals court ruled that the state can't require a tax on items it considers illegal. The opinion called the drug tax "arbitrary, capricious and unreasonable."
     The ruling upholds a lower court's decision. A spokeswoman for the state Department of Revenue did not immediately return a message seeking comment.
     Tennessee collected $1.8 million from the tax in 2006.

SEC to Review Role Of Credit-Rating Agencies

     Federal regulators are reviewing the role credit-rating agencies played in the
     mortgage market debacle for people with weak credit.
     Critics of the three biggest ratings agencies - Standard & Poor's, Moody's Investors Service and Fitch Ratings - said they failed to give investors adequate warning of the risk posed by mortgage securities. The agencies also were vulnerable to conflicts of interest because they are paid by the companies whose bonds they rate, critics charge.
     The Securities and Exchange Commission "has begun a review of credit rating agency policies and procedures," SEC spokesman John Nester said.
     That review, he said, will include whether rating agencies give advice to issuers of mortgage debt and mortgage originators, any conflicts of interest and the meanings of ratings.
     The credit-rating agencies, whose ratings are used by investors to gauge the riskiness or safety of mortgage-backed bonds and other forms of debt, are subject to SEC oversight enacted last year.
     In testimony before Congress, op-ed columns in newspapers and elsewhere, the agencies defend their track record of analyzing the mortgage market in recent years and say they have adequate protections against conflicts of interest. Comments from the agencies on the SEC review were not immediately available Friday morning.
PROPERTY SALES 0 133 1,342
MORTGAGES 0 131 1,047