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VOL. 124 | NO. 2 | Monday, January 5, 2009

Daily Digest

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Former Steak & Ale Sells for $1.9 Million

RABF Holdings LLC, an investment group headed by Bernard Farber, Robert Allen and Anwar Aman, has bought the old Steak & Ale restaurant at 6201 Poplar Ave. for $1.9 million from CNL Net Lease Funding 2001 LP.

The sale closed Dec. 18, about three months after the restaurant shuttered its doors. The 6,291-square-foot Steak & Ale restaurant sits on 1.33 acres on Poplar Avenue east of Ridgeway Road and was built in 1980. The Shelby County Assessor of Property’s 2008 appraisal was $1.5 million.

Steak & Ale’s parent company, S&A Restaurant Corp., filed bankruptcy in late July, closing hundreds of Steak & Ale and Bennigan’s restaurants nationwide. The Bennigan’s at 5336 Poplar Ave., however, isn’t closing.

RABF Holdings financed the purchase with a $1.6 million loan through First Capital Bank.

Source: The Daily News Online & Chandler Reports

County Law Library To Remain Open

A decision last month by the Tennessee Supreme Court to close its public law libraries will not affect the law library at the Shelby County Courthouse.

The decision took effect with the new year, but Friday when the courthouse reopened, the local library was still open. The high court announced it would close the libraries it funds because of the cost of updating law books and fewer people using the facilities.

A 1970 private act passed by the Tennessee Legislature requires every county with a population of more than 600,000 to have a county law library. The law library at the Shelby County Courthouse is funded with litigation fees and run by a nine-member board appointed by senior judges of different courts.

Regions Short Term Bond Fund Liquidated by New Manager

Hyperion Brookfield Asset Management, the firm that took over in July the management of seven Regions Morgan Keegan Mutual funds, has decided to liquidate one of the funds – the Regions Morgan Keegan Select Short Term Bond Fund.

Approval of the liquidation is subject to shareholder approval, and sales of fund shares to new investors are expected to stop effective on or about Jan. 23.

Hyperion also scrubbed the Regions Morgan Keegan name from the funds it manages, replacing it with the word Helios.

US Manufacturing Index Drops to 28-Year Low

A gauge of U.S. manufacturing activity hit its lowest level in 28 years in December as the recession depressed every corner of industry, hurting companies from bakeries to cigarette-makers to aluminum smelters.

The Institute for Supply Management, a trade group of purchasing executives, reported Friday its manufacturing index fell to 32.4 in December, a greater-than-expected decline from November’s reading of 36.2. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5.

Components of the index hit historic lows. New orders fell to their lowest level on records going back to 1948. Prices fell as the number of respondents saying they had paid more in December than in November sank to its lowest monthly reading since 1949.

A reading for the overall index above 50 signals growth, while a reading below 50 indicates contraction. The index, based on a survey of the institute’s members, has fallen steadily for the past five months as the economy deteriorated.

December’s reading was the lowest since June 1980, when the

economy was near the end of a six-month recession.

If December’s rate of manufacturing activity were to persist for 2009, the nation’s gross domestic product would show a 2.7 percent contraction, said Norbert Ore, chairman of the group’s business survey committee. GDP, the broadest measure of economic activity, decreased at an annual rate of 0.5 percent in the third quarter of 2008, according to the Bureau of Economic Analysis.

Only three recessions in the history of the index have showed weaker manufacturing readings, said John Ryding, of RDQ Economics. Those recessions were in 1948 to 1949, 1973 to 1975 and 1980.

With European manufacturing indices also dropping, “the case for a massive global fiscal stimulus continues to grow,” Ryding said.

As the economy sputters through a recession that began in December 2007, no industry is proving resistant. No sector reported overall growth in December. Also, none reported growth in new orders, production, employment or prices, as businesses from tobacco to coal products to foodmakers saw declines.

Declining prices, coming after the summer’s soaring market for commodities, have sent manufacturers – especially in chemicals and metals – reeling.

Forest, Paper Products Firms Struggled in 2008

Lumber and paper products companies faced two challenges in 2008, soaring energy costs in the first half, and sinking demand for their products in the second, which sent shares tumbling for the year.

From January through July, a surge in the price of oil to a peak of about $147 per barrel, which raised shipping costs, and a spike in the price of natural gas, which is used to power mills, cut into profits.

Since then, crude oil has retreated below $40 per barrel and natural gas prices have fallen by about 60 percent, but the industry faced another challenge as demand for forest and paper products collapsed under the weight of a deepening global credit crisis and ensuing recession.

Share prices tumbled an average of 67 percent among companies that produce everything from plywood to paper, according to the Dow Jones U.S. Forestry & Paper index. By comparison, the Dow Jones Total Market index fell 39 percent while the Standard & Poor’s 500 index lost 39 percent.

The difficulty extended across the forest and paper products industry. In October, newsprint demand in North America had fallen by nearly 20 percent, year over year, according to Kimberly Nolandof of Gimme Credit, as retailers shifted advertising spending to the Internet from newspapers. Demand for printing and writing paper also slid, hammering shares of newsprint makers like Delaware-based AbitibiBowater Inc., which fell nearly 98 percent.

By November, demand for containerboard, a paper product used to make cardboard, also waned, dropping 8.6 percent year-over-year – only the third time in the past 35 years that demand dropped so dramatically, according to UBS analyst Gail Glazerman said. Shares of Memphis-based International Paper Co., a top North America corrugated packaging maker, fell 64 percent.

Meanwhile, demand for two-by-fours and other construction lumber dried up as the U.S. housing market contracted. In December the U.S. Commerce Department reported November housing starts were the lowest since it began keeping records in 1959. Shares of timberlands and wood products maker Weyerhaeuser Co., of Federal Way, Wash., declined 58 percent in 2008.

Interbank Lending Rates Edge Down at New Year

The cost of three-month loans between banks in the U.S. and Europe dropped further Friday as concerted government efforts to shore up confidence in the financial system and massive interest rate reductions continued to thaw previously frozen credit markets.

The interbank lending rate on three-month loans in dollars – known as the London Interbank Offered Rate, or Libor – fell 0.02 percentage point to around 1.41 percent, according to the British Bankers’ Association.

Meanwhile, the rate for three-month loans in euros – known as the European Interbank Offered Rate, or Euribor – decreased around 0.03 percentage point to around 2.86 percent. The equivalent rate for pounds fell 0.06 percentage point to around 2.71 percent.

Interbank rates are important because they affect the cost of loans in the wider economy, for both businesses and individuals. Rates have been high in recent months as banks have hoarded cash and worried that other lenders might collapse and not pay them back.

All three lending rates remain above their benchmarks set by central banks – 0-0.25 percent in the U.S., 2 percent in Britain and 2.5 percent in the 15-nation euro zone. Both the European Central Bank and the Bank of England are expected to cut rates again during January.

MAAR Commercial Council Elects Skopp President

The Memphis Area Association of Realtors Commercial Council has elected Irvin Skopp of Belz Realty Co. as the 2009 board of directors’ president and Wyatt Aiken of Commercial Advisors as 2009 president-elect.

The 2009 and 2010 board also will include newly elected Dave Curran of Commercial Advisors as vice president, Tom Hutton of Boyle Investment Co. as director, Janet Slawson of MMIC Inc. as director, and Jason Polley of Stonecrest Investments as director.

They will join the existing board members who will continue to serve in 2009. They are Steve Guinn of Highwood Properties, immediate-

past president; Scott W. Barton of CB Richard Ellis, director; Lea Heilig of Woodyard Realty Co., director; and Ron Riley of In-Rel Management, director.

The following chapter representatives will serve on the Commercial Council board for 2009: Memphis Metro CCIM chapter President Henry Stratton, IREM Memphis chapter

President Rick Raffanti, Realtors Land Institute Tennessee chapter President Glen Bascom, SIOR Memphis chapter representative Steve

Guinn and MAAR board of directors liaison Landis Foy.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 128 128 17,998
MORTGAGES 155 155 20,990
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 149 149 36,765
BANKRUPTCIES 60 60 11,985
BUSINESS LICENSES 19 19 5,696
UTILITY CONNECTIONS 49 49 12,297
MARRIAGE LICENSES 40 40 4,518

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