Archive for July, 2010

Prominent Magazine Sues Developer

Monday, July 19th, 2010

Generally speaking, there is a long history of animosity between the press and real estate developers. Ok, so maybe that’s not such a big surprise to most of you, but still, in many a journo’s view, developers are right up there on the list of least-favored citizens along with lawyers (though it is true that lawyers often make the best CEOs of real estate firms).

Even so, it isn’t every day that the press actually takes action and sues a developer, but such is the case right now in Austin, Texas.

I read with great interest a story over the weekend in one of the best darn newspapers left standing in America, the Austin American-Statesman. It turns out that Emmis Publishing, which owns Austin-based Texas Monthly magazine, one of the most highly decorated magazine properties in the country, is suing the developer of its new office building.

Forget for a moment that lenders foreclosed on the eight-story building, that’s a story for another day. In the here and now, TM moved into its new building just off I-35 last August, and much of the surrounding development promised by the developer has not happened, including a hotel and restaurants. This is just a wild guess, but I’m thinking the sour economy might have had something to do with those plans.

Anyway, I’m surprised we aren’t reading more about these types of situations, half-finished projects and unhappy tenants. Maybe we will…

Here’s the full story from the paper.

Beware “Exploring Strategic Alternatives”

Wednesday, July 14th, 2010

For crying out loud, who’s next? That’s what I find myself asking these days. Just when you think things in the U.S. economy might be turning around, wham, your instincts are shattered.

Two new announcements this week are proof positive of the state of things.

benihanaBenihana, one of my all-time favorite places to watch people play with knives and get away with it, announced that it is “exploring strategic alternatives,” which is just another way of saying “we’re going to sell ourselves to whoever might want to buy us, or we’re going out of business.” Period. Those are the only “alternatives” my friends.

Check out the formal statement:

MIAMI–(BUSINESS WIRE)–Benihana Inc. (NASDAQ: BNHNA; BNHN), operator of the nation’s largest chain of Japanese theme and sushi restaurants, today announced that its Board of Directors has decided to explore strategic alternatives available to the Company, including a possible sale, in order to maximize shareholder value.

Richard C. Stockinger, Chief Executive Officer, said “While the Company strongly believes in the renewal program and that significant progress has been made toward achieving its goals, the Company has also stated its intention to commence an expansion plan through restaurant development and/or acquisitions. However, growth would be predicated on raising additional capital, and the Company is reluctant to issue new equity at current price levels. Furthermore, several large shareholders have expressed disagreement with the Board and have indicated a desire to seek Board membership to pursue a change in the Company’s strategic direction.”

Mr. Stockinger concluded, “The combination of issues relating to raising new capital and the divergent views of these shareholders have made it extremely difficult for the Company to implement with confidence a growth plan that would include organic growth as well as acquisitions at this time. As a result, the Board has determined that the best course of action is to engage in a formal review of strategic alternatives available to the Company with the assistance of a qualified financial advisor, including a possible sale. The objective would be to enhance shareholder value, while also maintaining and furthering the strategies the Company has initiated.”

The Company does not intend to disclose developments with respect to the progress of its strategic review until such time as the Board has approved a transaction or otherwise deems disclosure appropriate.

A day earlier, another seeming stalwart firm (at least to me anyway), the owner of the Bugaboo Creek restaurant chain (I kid you not on the name), announced its own solicitation of “alternatives”:

MOUNTAINSIDE, N.J.–CB Holding Corp., parent company of Charlie Brown’s Steakhouse, Bugaboo Creek Steak House and The Office Beer Bar & Grill restaurants, today announced its engagement of investment banking firm Raymond James to assist it in its evaluation of strategic alternatives for its Bugaboo Creek Steak House brand. Bugaboo Creek Steak House was acquired in 2007 by CB Holding Corp.

“Bugaboo Creek Steak House, with its high standard of affordable hospitality and entertaining experiences, holds a unique and compelling position in the casual dining restaurant category. We remain passionately committed to our valued Bugaboo Creek Steak House customers and our restaurant employees while we evaluate the best strategic plans for the brand,” said Sam Borgese, president and CEO of CB Holding Corp.

Bugaboo Creek Steak House serves more than 3.5 million guests each year at its interactive and charming lodge setting restaurants. The brand consists of 30 restaurant units along the eastern seaboard and employs 1840 people.

Can anyone please tell me what on earth the world is coming to when a cool restaurant concept using motorized black bears, beavers and moose (is that plural?) can’t make it?

Choppy Choppy Times We Live In

Tuesday, July 6th, 2010

The signs of churn are all around us. Some days it’s two steps forward and others it’s one step back.

Is it just me or are commercial real estate transactions picking up steam? Several big office towers, for example, have traded in recent weeks in major metros.

A second major CMBS issue has now come to market in 2010, which is a promising signal that industry might be coming to life once again.

Even Ernst & Young issued a new report last week noting “The real estate market is starting to stir. The trends point to increased transaction volumes and varied activity in 2010, including a rise in loan sale transactions.”

Obviously the biggest concern is the jobs picture, which has more elevation changes than a roller coaster ride at Six Flags. One week they’re up, the next they’re down.

In many major markets, it’s a choppy scene at best. Take Dallas for example, where the DFW metro economy has improved of late, adding 3,400 jobs in the past year and where the unemployment rate dropped to 8.2% in April from 8.7% in January.

Unfortunately since CRE generally lags the economy, office absorption in the local market was a negative 550,000 sq. ft. and the vacancy rate shot up to 18.5% in the second quarter from 18% in the first quarter, according to Delta Associates, the research affiliate of Transwestern.

That didn’t stop CB Richard Ellis Investors from buying two high-profile office buildings in the local Preston Center market for a rumored $130 million, making it one of the largest sales in North Texas this year.

The DFW industrial scene is a different story, with 492,000 sq. ft. of absorption achieved in the second quarter and 836,000 sq. ft. of space occupied this year, compared to negative 1 million sq. ft. in the first half of 2009. That’s a vast improvement, but will it last?

It looks like those choppy waters are going to be around for just a tad longer.