Author (#80)August 2006 Archives

Van Nuys-based Cherokee Inc. (CHKE) said its client Camp Beverly Hills LLC, has
entered into an exclusive international license agreement with Ruppert BV of The Netherlands. The territory covers Belgium, Luxembourg, The Netherlands, Germany and The United Kingdom. Detailed terms of the multi-year agreement were not disclosed, but it includes a wide range of men's, women's and children's apparel categories.

NEW STORE
Calabasas-based The Cheesecake Factory Inc. (CAKE) said today announced it opened its 109th store at the Colonie Center Mall in Albany, New York on August 29, 2006. The restaurant contains approximately 10,800 square feet and 300 seats.

DISNEY PROMOTION
Burbank-based The Walt Disney Co. has named Joe Schott Vice President and
Executive Managing Director, Walt Disney Attractions Japan and
Disneyland International. He's a 25-year veteran of the company.

DIGITAL DEAL
El Segundo-based DIRECTV Inc. boasts its achieved universal dominance
in live music television with a series of recently added international
distribution deals for its original weekly concert series, CD USA. The original program has featured performances by Kelly Clarkson, The Goo Goo Dolls, Jewel, Ashlee Simpson and the Pussycat Dolls, among other top acts, since its January debut.
DIRECTV, in association with Blaze Television, will expand the CD USA
brand through News Corp.'s international offerings.

MORE HOUSING SLUMBER
Home buying activity continues to weaken, according to the latest survey released Wednesday by the Washington, D.C.-based Mortgage Bankers Association.

For the week ending Aug. 25 it's index that tracks loan application volume fell 2.3 percent from the prior week and off 22.4 percent from the year-ago period.

The seasonally-adjusted Purchase Index decreased by 1.6 percent from the previous week and the Refinance Index increased slightly to 1609.2 from 1608.5.

The PI is now at its lowest level since November 2003.

The association said that the refinance share of mortgage activity increased to 41.5 percent of total applications from 40.6 percent the previous week. The adjustable-rate mortgage share of activity increased to 26.8 percent of total applications from 26.4 percent the previous week.

The average interest rate for 30-year fixed-rate mortgages increased to 6.39 percent from 6.38 percent, with points increasing to 1.03 from 0.98 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

And the average rate for 15-year fixed-rate mortgages increased to 6.06 percent from 6.04 percent, with points decreasing to 1.06 from 1.12 (including the origination fee) for 80 percent LTV loans.

The average one-year ARM rate increased to 5.97 percent from 5.91 percent, with points increasing to 0.91 from 0.82 (including the origination fee) for 80 percent LTV loans.

The MBA survey covers about 50 percent of all the nation's retail residential mortgage originations.

Home construction activity plunged 35.1 percent in July from June and condominium and apartment activity cratered 56.8 percent, said the California Building Industry Association. The overall market is down 43 percent from June.
The news is not all grim though, noted the Sacramento-based association.
It's release about last month's activity, as measured by the number of building permits pulled started this way.
“Although overall housing starts fell nearly 43 percent since June of this year, residential construction is still on target for production of 180,000 units...�
CBIA Chief Economist Alan Nevin said that new-home construction in California is expected to continue cooling off for the remainder of 2006 as the housing market adjusts from a superheated state to more normal conditions.
During the year's first seven months single-family activity is down 22.6 percent from a year ago. Multi-family activity is up 4.5 percent.
Total activity between January and July is off 15.9 percent from the year ago period.
Nevin said that builders will continue to reduce their standing inventory of unsold homes that are under construction or completed, and are now using aggressive marketing techniques to reduce their inventory.
“At the present rate, we anticipate that the inventory will be nearly depleted by the end of the third quarter.� Nevin said. “From that point on, builders will only build what they can pre-sell.�
In the Los Angeles area activity fell 39 percent from June and but is up 9 percent year-to-date.

It's a black Friday at the big Boeing Co. plant in Long Beach where workers received word this morning that production on the C-17 military cargo plane will end, a decision likely to eliminate 11,500 jobs, many of them in Southern California.
Workers got the news via a videotaped statement from Jim Albaugh, president and chief executive officer of the company's Integrated Defense Systems unit. Dave Bowman, Boeing's vice president and C-17 program director, weighed in live.
The company's terse news release follows.
Due to the lack of U.S. government orders for the C-17 military cargo aircraft, The Boeing Company is directing program suppliers to stop work on uncommitted airplanes. This move will be the first step in an orderly shut down of the production supply chain should no further orders be received from the U.S. government.
For over a year, Boeing spent its own money protecting the C-17 supplier base. This investment was intended to keep the production line viable while the U.S. Government and Boeing pursued international orders, and to allow time for the U.S. Government to update its post-9/11 mobility requirements, if they chose to do so. During that time Boeing received international orders and commitments for more than a dozen of the advanced air lifters. Congress has added funding for up to three more as part of its recent 2007 budget deliberations. However, when the orders are totaled, there are not enough to sustain continued production beyond mid-2009.
Since late 2005, Boeing has stressed the need for a commitment from the U.S. Government for continued C-17 procurement or the company would be forced to make the difficult decision to begin winding down the production line.
This action will ultimately affect the 5,500 Boeing jobs in California, Missouri, Georgia, and Arizona, directly tied to the C-17, and the program's nationwide supplier workforce that totals more than 25,000 people. Nearly 700 companies in 42 states provide parts and services that go into each C-17.
“The C-17 is one of the Defense Department's most successful acquisition programs ever,� Ron Marcotte, vice president and general manager of Boeing Global Mobility Systems, said in the release. “No one questions its operational value. But we can't continue carrying the program without additional orders from the U.S. Government.�
The stop-work orders affect long-lead items from suppliers that, in many cases, are built 34 months before a C-17 is delivered. Boeing is re-evaluating the financial impact should the U.S. government not order additional C-17s, and may incur costs aside from any recovered from the U.S. government.
Jack Kyser, chief economist at the Los Angeles County Economic Development Corp., said that he learned of the decision Thursday afternoon.
“It's a tragedy for Long Beach, it's a tragedy California and a tragedy for the nation. You are losing jobs in a very unique capacity that are going to be hard to replicate in the future.�
In addition to the jobs at the plant Kyser said that about 6,000 others are spread among suppliers in the region.
In Los Angeles County the average average aircraft manufacturing wage is $$73,200. And each job at the plan creates 3.4 other elsewhere in the economy.
Kyser also wonders why the government has five fighter programs in production or development.
“There are a lot of people concerned about the future airlift capacity for the U.S. military
Kyser said.
Sen. Dianne Feinstein, D-Calif., Gov. Arnold Schwarzenegger, a
Republican, and Rep. Juanita Millender-McDonald, D-Long Beach, are among the elected leaders who have urged the Bush Administration to keep the program alive.
The bottom line: The local aerospace sector is taking a big hit at the same time the housing market is cooling. Sort of feels like the early 1990s all over again.

With August winding down we'll get a better grasp on just how broad and deep is this malaise that's settled over the residential real estate market.
We already know that in the San Fernando Valley it's reached Betty Grable status, meaning its got legs.
DataQuick Information Systems' monthly report, which usually comes out on the the15th (Tuesday) focuses on Southern California.
Past reports show that the broad Los Angeles County market is still chugging along in terms or price increases, although those gains now look tepid compared to the past several years. And San Diego County's median price has already fallen under the year-ago level one month before bouncing back up above it the next.
San Diego was the first market to take off and the first to retreat.
Others in the region are expected to follow suit.
The California Association of Realtors July tally follows the final week of the month.
And this market turn has been so strong that the association's economists made a big downward revision to this year's sales forecast a couple of months ago.
The bottom line: There are winners and losers in both bull and bear markets.
AFFORDABILITY
It wasn't that long ago that CAR rolled out its Housing Affordability Index every month. It tracked how many households in the state and major metro areas could afford to buy a median priced home two months ago.
Notice you haven't seen that index for a very long while. The association published its last one on Jan. 12.
Turns out there was a problem. Even though rising prices continued to drive down afford ability sales continued to rise.
Something had to be wrong.
There was. The index had a couple of problems.
It was not capturing who was buying. One component assumed that no more than 30 percent of a household's gross income could go toward the house payment and that a 20 percent down payment was required.
Lenders made loans on higher income limits and lower down payment requirements.
About a year ago the Los Angeles-based association quit issuing the index and said it was going to be reworked.
Now it appears that was a tougher job that initially thought. The original plan called for the re-jiggered index to be rolled out in the first quarter. The it was pushed back to the middle of this month, which is now.
Association spokesman Mark Giberson said that the new and better index comes out on Thursday. Actually, it will be two indexes.
One tracking first time buyers and the second repeat buyers.
Affordability will now be tracked on a quarterly, rather than monthly, basis.
The first one will cover this year's first and second quarters and compare them with the like period a year ago.
"Both have different assessments on down payments, loan products and that type of thing," Giberson said.
Here's a recap of the last index in its old form, which tracked affordability in November, 2005.
It fell an annual 5 percentage points and slipped to record lows in seven areas, including Los Angeles County. Rising interest were partly to blame them.'
They will be partly to blame now, I suppose.
As the year wound down just 14 percent of the state's households could afford a home priced at the then median of $548,770.
The record low for the state was 13 percent and that came twice in 1989.
In Los Angeles County the median priced home cost $575,310 last November, within reach of just 11 percent of households.
The biggest drop then, 16 percent, cane in the High Desert region, which includes the Antelope Valley. There 24 percent of households could afford a house priced at the median $320,860.
The bottom line: The index may be new but I suspect somethings will remain unchanged.
Affordability will lower this year than last year for both first timers and repeat buyers.
And the High Desert will be one of the most affordable regions in the state.
.

They are going to have a blast by the Los Angeles Harbor in San Pedro on Sunday.
Get up before the sun if you want to see it live.
Explosives experts plan to implode the former Pacific Trade Center to make way for the Vue, which will be the seaside city's largest high rise condo complex.
Also its first high rise residence.
And it will be the first implosion in the City of Angeles in 10 years (if you don't count the administration of former Mayor James Hahn. His sister, Janice, represents San Pedro on the City Council).
The 12-story center has been vacant for 10 years.
The 121,966 square foot center was built in 1964.
According to a news release touting the event, “five pounds of explosives strategically placed in selected supporting areas� will bring down the building.
“When discharged, the explosives will allow gravity to pull down the building in a controlled manner.�
Maybe.
In any event, this Galaxy Commercial Holdings LLC can start construction once the rubble is cleared. The Vue is a $175 million project with 318 units.
It's the largest development on the waterfront in Old Town San Pedro and the building had the second most successful sales launch in Southern California history, hitting more than $100 million in sales in two days, according to the developer.
The Bottom Line: An implosion to herald a new housing project is interesting timing since the housing market seems to be imploding.

THE BIG DEAL
Broadreach Capital Partners, a Palo Alto-based private equity firm that invests in commercial real estate, made a big play today, paying $209 million for an 18-building portfolio in Southern California.
It was sold by The Shidler Group, in partnership with Angelo, Gordon & Co.
Shidler acquired the portfolio in late 2004 for $138.5 million and invested more than $6 million in improvements.
The buildings have 165 tenets and are 82 percent occupied.
"There is a tremendous amount of demand for well-located, high-quality office properties. With the continuous flow of capital into the commercial real estate sector, we felt the timing to be opportune to sell into a very strong investment market and to prune our portfolio of select assets as part of our capital recycling program," said Matt Root, a partner in The Shidler Group.
Tenets include Catellus Development, the City of Los Angeles, California Department of Motor Vehicles, USA Today and Verizon.
The buildings are in nine projects.
Ten of the buildings are in the Los Angeles area.
One is Glendale Corporate Center, a 111,072 square foot building at 425 Corporate Street in Glendale.
The Shidler Group is a national real estate organization that actively acquires commercial real estate for its own account. It currently owns and operates over 8 million square feet of commercial property throughout Texas, Arizona, Hawaii and Southern California. Since its founding in 1972, The Shidler Group and its affiliates have facilitated the acquisition of over 145 million square feet of commercial property.

THE BIG PICTURE
Susquehanna Financial Group homebuilding analyst Stephen East offers the following take on The National Association of Realtors Pending Home Sales Index released this morning (Monday).
The PHSI was up versus last month and better than consensus expectations.
“ Net, the flattening picture of the slowdown continued in June for the PHSI - a big positive in our mind. As far as future reports go, August looks to have the toughest comparisons to last year, consequently that report should go a long way toward telling us where this housing market is in its transition,� East wrote in an e-mail.
He believes a decline of 9.6 percent is a very manageable drop and all else being equal, investors should feel relieved by this latest data point.
Here's what caught his eye.
The South region was up 2.5 percent monthly and is now only down 4.8 percent annually.
The West region fell an annual 14.2 percent and it was flat monthly.
“Stabilization in the West will be key for the builders and it looks like we are seeing that occur. However, the upcoming August to October time frame will be difficult for the West region given strong activity there in '05.�
While that is not necessarily the case for the South, as Y/Y comps generally look reasonable with only August being more difficult.
The PHSI measures contracts signed for existing single family and multi-family homes, but there is no breakout between the two types.