VOL. 124 | NO. 34 | Thursday, February 19, 2009
Luther Tower Owner Files $3.2M Trust Deed
Luther Tower Investors LLC has filed a $3.2 million multifamily deed of trust, assignment of rents and security agreement through First American Title Insurance Co. for Luther Tower, a 195-unit high-rise senior apartment building at 274 S. Highland St., near the University of Memphis.
The 13-story, 134,464-square-foot building sits on 1.33 acres at the northeast corner of South Highland Street and Central Avenue, in the Buntyn Highlands subdivision. It was built in 1971. Luther Tower Investors is a local affiliate of Greenville, S.C.-based PK Management. The company bought the property in 2006 for $3 million.
An employee with the property said Luther Tower is 95-percent occupied and is open to seniors aged 50 and older. The Shelby County Assessor of Property’s 2008 appraisal was $3.3 million.
PK Management also owns Pendleton Place at 1780 Pendleton St. in the Defense Depot area, which it bought in 2007 for $2.7 million. The company operates that facility under the Pendleton Investors LLC entity.
Source: The Daily News Online & Chandler Reports
Class-Action Suit Filed Against Stanford
A class-action lawsuit has been filed in federal court in Texas on behalf of investors who have money tied up in the Stanford Financial Group family of companies, the business enterprise tagged in a sprawling complaint by the U.S. Securities and Exchange Commission this week alleging a massive fraud.
The suit names four plaintiffs who claim to have collectively entrusted almost $1.8 million to Stanford for investment purposes. Stanford has a brokerage office in Memphis that was raided and closed this week by federal agents.
City’s Buyout Plan Changes From Proposed Form
The city employee buyout plan approved by the Memphis City Council this week was different from the plan proposed by the Herenton administration.
The plan’s goal is to entice 100 city employees with 15 or more years of service to leave the payroll and save the city an estimated $6.4 million a year going forward. The plan has a one-time cost of $6.4 million.
But council members didn’t think the buyout should be offered to full-time elected leaders and division directors or their deputy directors. That provision was amended out of the final terms.
“We’d be frontloading pay and turning right around and filling positions,” said council member Shea Flinn.
The council also voted down an attempt to whittle down the number of sick days city employees taking the buyout could claim as part of the offer. The administration had proposed up to 150 days. Council member Kemp Conrad proposed a 75-day cap, which would have been in keeping with existing city policy.
There was more of a difference of opinion among council members on that point.
And Chief Administrative Officer Keith McGee argued the council was making the incentive to leave city government less attractive.
“We’re asking individuals to consider leaving their jobs, never returning again, at a point in time that the economy has challenges – in order to benefit the city of Memphis,” he told council members. “When you are asking people to leave city government without a pension, we think it is fair.”
The 75-day cap on sick leave accrual failed on a 5-7 council vote.
The overall amended buyout plan was then approved on an 8-4 vote.
Council chairman Myron Lowery was among the four no votes.
“I find it hard to spend money to save money. That’s what this is,” he said before referring to the Chancery Court ruling earlier in the day ordering the city to restore $57 million in funding to the Memphis school system. “With the court case coming before us … I’m more fiscally conservative.”
Commercial Real Estate Still Dropping, Stanton Says
Janice Stanton, managing director of investment research for Cushman & Wakefield in New York, discussed the global financial crisis and how it has impacted commercial real estate at Wednesday’s Commercial Property Forecast Summit, at the Germantown Performing Arts Centre and sponsored by the Memphis Area Association of Realtors Commercial Council.
Stanton’s message wasn’t cheery.
“There’s nowhere in the U.S. that’s escaping the teeth of the recession,” Stanton said during her keynote address.
Stanton said the economy is expected to reach the bottom by the end of 2009. Typically, commercial real estate lags other economic indicators by six to 12 months, meaning the industry won’t see a turnaround until 2010.
Much of the problem lies within the huge difference between what sellers want for properties and what potential buyers are willing to bid – or how much financing they can obtain. Also, the nation’s white-collar job loss has severely impacted, and will continue to affect, the office sector.
Stanton also talked about the hits that retail has taken, and she said while multifamily has been somewhat insulated, that sector also is down.
Memphis, however, is in a decent position as commercial real estate comes out of its funk thanks to the city’s emphasis on the industrial sector.
“Industrial is one of the first markets to recover from a recession,” said Stanton, noting that it is projected to fare much better than office or retail.
Last, Stanton talked about the possibility of a “snapback” time, when market recovery happens fast and furious. She said the next 12 to 18 months will provide the “biggest buying opportunity we’ve seen in decades.”
Stanton was followed by a host of local experts discussing commercial real estate trends.
Speakers included Jim Beaty of CBRE | Melody; MAAR Commercial Council president Irvin Skopp of Belz Enterprises; MAAR president Jon Albright of Investec Realty Services; J. Walter Allen of Integra Realty Resources; Todd Glidewell of C&I Appraisal Services; Andy Raines of Evans Petree Bogatin PC; Larry Cox of Memphis International Airport; John Dudas of Belz Enterprises; Darrell Wilson of Norfolk Southern Corp.; Larry Jensen of Commercial Advisors; Jim Mercer of CB Richard Ellis; Michael Greenberg of Makowsky Ringel Greenberg; and Cary Whitehead of Boyle Investment Co.
GTx’s Bone Fracture Drug Under FDA Review
Biopharmaceutical company GTx Inc. said Wednesday the U.S. Food and Drug Administration is reviewing its application for the drug candidate toremifene.
In December, the company filed an application with the regulatory agency to approve toremifene for the prevention of bone fractures in men with prostate cancer who are on androgen deprivation therapy. GTx said it expects more guidance in the coming weeks on the FDA’s timeline for the review.
Prostate cancer is the second most common type of cancer diagnosed in men in the U.S. An estimated 186,000 new cases of prostate cancer were diagnosed in the U.S. in 2008. Androgen deprivation therapy, which treats the cancer, tends to weaken bones.
Industrial Production, Housing Starts Plunge
Big industry production throttled back in January due partly to auto shutdowns, and housing construction tumbled to a record low, weaker-than-expected performances that show the country is caught in a worsening economic tailspin.
The Federal Reserve reported Wednesday that production at the nation’s factories, mines and utilities fell 1.8 percent last month. Many economists expected a 1.5 percent decline. It marked the third straight month where production was cut back and December’s performance was even weaker than initially reported, plunging 2.4 percent.
Another report from the U.S. Commerce Department said construction of new homes and apartments plummeted 16.8 percent in January from the previous month, to a seasonally adjusted annual rate of 466,000 units, a record low. Analysts expected a pace of 530,000 housing units.
Builders are slashing home construction as skyrocketing home foreclosures dump more empty properties on an already glutted market.
Applications for building permits, a barometer of future activity, also sank to a record low pace of 521,000 units in January, a 4.8 percent drop from the prior month.
“Another horrible month; more pain ahead,” predicted Patrick Newport, economist at IHS Global Insight.
The Fed’s report showed that factory production dropped by 2.5 percent in January. Shutdowns at plants making autos and related parts figured prominently in that decline. Output at mines fell 1.3 percent last month, while production at utilities rose 2.7 percent.
With more plants going idle, operating capacity at all industrial outlets dropped to 72 percent in January. That was down from 73.3 percent in December and was the lowest reading since February 1983.
Manufacturers have slashed production and payrolls as they scramble to survive the economic fallout. The collapse of the U.S. housing market has especially sapped demand for all kinds of building materials and equipment, as well as a range for consumer goods, including furniture, carpet and household appliances.
MIFA Receives $10K Grant From MGM
The Metropolitan Inter-Faith Association Life Skills Institute has received a $10,000 grant from the MGM Mirage Voice Foundation for the second consecutive year.
The MIFA Life Skills Institute provides guidance to homeless families for self-improvement and independence.
Through classes and group activities, families learn how to be financially independent and how to create a positive environment for children. They also receive transitional housing and case management through the MIFA Housing Opportunities program.
The MGM Mirage Voice Foundation provides employees of Gold Strike Casino Resort the opportunity to make direct contributions or divert part of their paychecks to charitable organizations.