What Goes Around, Comes Around

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FedEx Delivering Voluntary Buyouts to Employees . ..... the San Francisco Bay Area, New York City, Boston, Seattle and S
MARK HESCHMEYER, EDITOR

AUGUST 16, 2012

WWW.COSTAR.COM

A WEEKLY NEWSLETTER FOCUSING ON CHANGING MARKET CONDITIONS, COMMERCIAL REAL ESTATE, MORTGAGES AND CORPORATIONS PUBLISHED BY COSTAR NEWS

IN THIS WEEK'S ISSUE: What Goes Around, Comes Around .................................................................................................................................................. 1 Your Partner for CMBS Restructure Success! ................................................................................................................................... 3 Lehman Bros. Files to Take Archstone Public ................................................................................................................................... 3 Expanding the Bounds of REIT Real Estate ...................................................................................................................................... 4 Are Clicks Cannibalizing Bricks? ....................................................................................................................................................... 5 Grey Muting the Green in Spending Outlook ..................................................................................................................................... 5 Bankers Note Some Easing of CRE Lending Standards ................................................................................................................... 6 Percentage of CMBS Loans Paying Off Hits New 12-Month Low ..................................................................................................... 6 Fannie and Freddie's Returns to Profitability Fleeting or Redemptive? ............................................................................................. 7 Watch List: $731 Mil. of Properties in the News This Week Facing Distress ..................................................................................... 7 Crescent Resources Builds Housing War Chest ............................................................................................................................... 8 Capital Bancorp Takes Restructuring Efforts to Bankruptcy Court .................................................................................................... 8 Mass Layoffs Lowest Since 2007 ...................................................................................................................................................... 9 Loans and Properties Under Surveillance ....................................................................................................................................... 10 Google Canning 20% of Motorola Workforce; One-Third of its Facilities ......................................................................................... 11 FedEx Delivering Voluntary Buyouts to Employees ........................................................................................................................ 11 Closures & Layoffs: 2,800 Workers Facing Layoffs in Coming Weeks ............................................................................................ 11 Benihana Cooks Up Sale Leaseback Deal with Cole Affiliates........................................................................................................ 12 Top 10 CRE Stories of July ............................................................................................................................................................. 13

What Goes Around, Comes Around When Europe Sneezes, Will the United States Catch the Cold Again? A handful of global economic and CRE outlooks this week tie the fate of the U.S. and European Union markets uneasily together. While the United States real estate market seems comparatively healthy at the moment, economists are concerned that, in an increasingly global and international market, the lingering European financial crisis is dampening a recovery in the U.S. "The global economy seems to take two steps forward followed by one or two steps back, and it mostly has to do with Europe," said Ira Kalish, director of global economic at Deloitte Research in the United States in the company's Global Economic Outlook. "Each time the Eurozone starts to seem more stable, the crisis rears its ugly head again. The result is downward movement of European economic activity and increased uncertainty. Both of these factors, in turn, have a negative impact on growth everywhere else." Even U.S. Treasury Secretary Timothy Geithner is urging his European counterparts to be more forceful and creative in fighting the debt crisis and keep it from dragging down the global economy. Geithner said it will take "a long time" for broader economic and financial reforms to work, but for now "They have to be more forceful and more creative and more effective in calming the financial pressures that are doing so much damage to growth," Geithner told the Los Angeles World Affairs Council. Dr. Carl Steidtmann, chief economist at Deloitte Research, was more specific, identifying a series of structural problems he sees holding back economic recovery. "While Europe is grabbing a lion's share of the economic headlines, it is not the only problem beguiling the U.S. economy," Steidtmann said. "A wide range of structural problems pose a continuing threat to growth. In the best of times, these problems would simply limit the pace of growth. In difficult economic times, they make the economy more vulnerable to recession."

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These structural challenges Steidtmann sees include: The contagion effects from a European meltdown; A deepening of the liquidity trap that makes the Federal Reserve's task of managing monetary policy more difficult; Structural problems in the labor market due to a mismatch between the job skills, location of the unemployment, and the available job openings; A sharp reduction in the pace of new business formation; and Private sector debt reduction that still has a long way to go. The European economy moved into a recession in the second quarter of 2012. For the Eurozone as a whole, real growth fell 0.1% in the first quarter of 2012 from a year ago, Steidtmann contends. "The financial crisis of 2008 started in the United States and spread to Europe. In 2012, Europe is returning the favor. Since the creation of the euro, the U.S. and the Eurozone economies have been economically joined at the hip," Steidtmann said. "The hopes that the U.S. economy can somehow decouple from Europe is not supported by the data. The correlation between U.S. and Eurozone economic growth over the past decade has been a very high 89%." "Europe's recession will be transmitted to the United States through trade, European investment in the United States, banking, and the performance of U.S. companies with material European operations," he said. Jones Lang LaSalle's in its third quarter Global Market Perspective acknowledges the global storm clouds gathering again as Euro strains re-emerge. "After a promising start to 2012, prospects have become gloomier across the global economy. Once again it is problems in the developed world that are causing concern, JLL noted in its report. "The main trigger for this has been the deterioration in the Eurozone situation, as a series of elections have undermined the political commitment to austerity and rekindled market fears." "The recent news from the United States has been disappointing, with consumer and labor market indicators failing to maintain an encouraging start to the year. U.S. output forecasts have been edged lower as a result and below-trend GDP growth at 2.0% is now forecast, slower than in 2011," JLL researchers in London noted. "Europe's sovereign debt crisis continues to present the gravest risks to the global outlook." Both sentiment and levels of activity across the world's major commercial real estate markets have seesawed during the first half of the year, JLL noted. "Deals are taking longer to close and the market remains polarized as investors steer clear of risky assets, focusing instead on prime product in core markets like London, Paris and New York," the firm said. "Yet, in spite of economic uncertainties," JLL continued, "real estate as an asset class continues to attract a substantial weight of capital and remains firmly on track for this year's global investment volumes to match the robust levels of 2011." In the corporate occupier markets, leasing volumes are also up on the subdued levels of the first quarter, but activity is still running 10%-15% lower than in 2011. Expansion demand is relatively weak as corporate occupiers look for further cost savings and smart growth 'in situ'. Dr. Raymond Torto, CBRE Global's chief economist, sees much of the same in CBRE Global Office Rent and Global Capital Value Indices out this past week. "Rental rates and capital value improvements have slowed dramatically following considerable recoveries during 2011," Torto said. "However, despite the economic uncertainty, this quarter provided evidence, that while both occupiers and investors remain highly cost conscious, they are also forging ahead with expansions or investments in prime spaces. This dynamic has helped to bolster rental rates and capital values ever-so-slightly, and particularly in the U.S. market."

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The relative strength of the Americas (posting a 1.5% quarterly growth) has driven the Global Capital Value index upward at a modest rate, CBRE noted. However, the global growth rate has been weakened by the EMEA Capital Value Index, which fell 1.0% this quarter (its third consecutive quarterly setback), CBRE reported.

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Lehman Bros. Files to Take Archstone Public By: Randy Drummer Lehman Bros Holdings Inc. has filed to relaunch Archstone as a public company, just two months after winning full control of the Colorado-based apartment in a battle with Sam Zell's Equity Residential -- and nearly five years after Lehman and Tishman Speyer took Archstone private in a $22.2 billion leveraged buyout that played an important role in the giant investment bank's collapse and bankruptcy. Through the initial public offering (IPO), Archstone intends to again structure itself as a real estate investment trust (REIT) and apply for the listing of its common stock on the New York Stock Exchange under the symbol ASN. The company did not list the number of shares it plans to offer or the offering price. According to Archstone's S11 registration filed Aug. 10 with the U.S. Securities and Exchange Commission, the company has about $9.27 billion in consolidated debt compared to $14.2 billion in assets.

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Archstone will contribute the offering proceeds to its operating partnership, primarily to repay debt. As of March 31, about $2.8 billion of Archstone's U.S. consolidated debt was freely prepayable or prepayable subject to a minimal premium. Remaining proceeds will be used for general working capital purposes, potential future acquisitions, development costs and capital expenditures. Lehman sees monetization of Archstone holdings as a way to repay creditors and shareholders hurt by the collapse of the investment banking giant, which helped worsen the U.S. financial crisis of 2007 and 2008. However, rival apartment REIT Equity Residential made a $1.33 billion play for a 26.5% stake in Archstone in December, triggering a lengthy and costly fight for control of the company. Lehman exercised its right of first offer to block a series of bids by EQR, which walked away with a $150 million transaction termination fee after Lehman completed a deal to purchase the remaining stake in the apartment company held by affiliates of Bank of America and Barclays Capital for $1.58 billion. Archstone is primarily focused on the acquisition, development, redevelopment, operation and management of apartment communities in certain supply-constrained U.S. coastal markets, including Washington, D.C., Southern California, the San Francisco Bay Area, New York City, Boston, Seattle and Southeast Florida. The planned offering comes as many analysts say pricing may have peaked in the top-tier apartment properties in core markets where Archstone has a strong presence, although almost all agree multifamily fundamentals remain strong and are getting stronger for property sub-types. As of March 31, Archstone owned or had an ownership interest in 181 communities with 59,419 units in operation or under construction. The company also owned or controlled land for the development of 30 communities in planning that would add more than 8,546 new units to its U.S. portfolio.

Expanding the Bounds of REIT Real Estate Two new firms are exploring the potential to monetize their extensive real estate assets by converting to REIT status. And while not solely unique, the firms' properties aren't typically what you find in your usual REIT offerings. Among those seeking to expand REIT categories is Boca Raton, FL-based The GEO Group, Inc., one of the world's largest prison owner and operators. GEO submitted a request to the U.S, Internal Revenue Service for a private letter ruling regarding the potential advantages and disadvantages of a REIT conversion and to determine whether GEO would qualify to convert to a REIT. GEO's worldwide operations include 20,000 employees, 109 correctional, detention and residential treatment facilities, including projects under development, and 75,000 owned and/or managed beds. The jailer brought in nearly $1.6 billion in revenue last year. And in Baton Rouge, LA, Lamar Advertising Co., an owner and operator of outdoor advertising and logo sign displays, is also considering an election to real estate investment trust status. Lamar owns 121 local operating facilities with front office administration and sales office space connected to back-shop poster and bulletin production space. In addition, the company leases an additional 127 operating facilities at an aggregate lease expense for 2011 of approximately $7.4 million. But its most valuable real estate assets are the 6,900 parcels of property beneath its outdoor advertising structures. As of year-end 2011, it leased 75,300 active outdoor sites, accounting for a total annual lease expense of approximately $200 million.

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Are Clicks Cannibalizing Bricks? With retailers just recently beginning to recover from the effects of the enduring global recession, pressure is mounting for managers to eliminate inefficiencies in their channel portfolios, and, in an increasingly digital world, many are taking the axe to their retail store operations to fund their digital footprints. For example, Gap is closing 200 U.S. stores, while Lowe's is closing 20 stores and scaling back its plans for store expansion. But the strategy shift prompted the American Marketing Association to ask the question: Does opening retail stores help or hurt a retailer's online sales? The answer they found was surprising. "In the long run, sales in both the online and catalog channels benefit from the presence of retail stores. The physical presence of a store attracts new customers to the direct channels and encourages existing customers to buy more," concluded Dr. Jill Avery, assistant professor marketing at the Simmons School of Management and lead author of the analysis. Ryan McCullough, a real estate economist for CoStar Group also recently analyzed the effect of e-commerce across a variety of retail segments. McCullough compared 2010 retail sales growth by segment against the change in occupied square footage of a sampling of retailers in fiscal year 2011. In a period of record-high profitability, such as is the case today, one might expect retailers to expand their footprints at the same rate or faster than their sales growth if their physical stores are indeed productive. McCullough concluded that auto parts, warehouse club, and sporting goods retailers are still wringing solid productivity out of their storefronts. The electronics/appliances segment also appears to have productive at least through the end of 2011. This year, though, Best Buy, which had been expanding through the end of FY 2011, has since announced plans to shutter about 50 of its stores this year. Other retailers in this category, like RadioShack, have been reducing their physical presences for the past several years, so absorption is likely to be weak from this group going forward. On the cannibalized end, there is a conspicuous gap between total sales in clothing/accessories and the segment's corresponding physical demand growth. With e-commerce in this segment growing at a much faster rate than overall e-commerce, it is easy to speculate on what has lured those dollars away, McCullough said. "Don't make the mistake of thinking that the slowdown in leasing from clothing retailers is a temporary phenomenon," McCullough warned. "Conservative growth is likely to be the new normal for retailers in this segment no matter how profitable they become."

Grey Muting the Green in Spending Outlook There's reason advertisers are willing to pay big bucks to have their ads reach a young adult audience. People younger than 55 spend more money than 'old folks,' and that has John Lonski, chief economist of Moody's Capital Markets Research Group, concerned. Old timers' role as a primary driver of job growth curbs both spending and inflation, Lonski noted in a report this week. It's been bad enough that employment income has been growing by 3.5% year-over-year recently, which is well under its 5.5% average annual increase during the four-years-ended June 2007. "Worse yet," Lonski wrote, "the fact that employment growth has been skewed toward workers aged 55 years and older suggests that a disproportionate share of the U.S. subpar expansion of income has been directed toward Americans having a lower propensity to spend and a stronger inclination to seek out bargains."

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During the three-months-ended July 2012, a record 21.3% of U.S. employment consisted of workers aged at least 55 years of age. "As this ratio continues to set new record highs going forward, both household expenditures and price inflation are likely to remain subdued," Lonski wrote. "Arguably, older populations slow down the velocity of money, which implies that each additional dollar of the money supply tends to be associated with a smaller increase by total spending than otherwise." "When the youngest segment of the U.S. workforce, or those aged 16 to 24 years, peaked at a record high 23% of employment, the year-over-year growth rates were 6.7% for the annual rate of core PCE price index inflation and 4.7% for real consumer spending," Lonski wrote. "Now that the oldest segment, or those aged 55 years and up, has set a record high relative to total employment, the annual rates of growth have slumped to 1.8% for the core PCE price index and 1.9% for real consumer spending."

Bankers Note Some Easing of CRE Lending Standards At domestic banks, lending policies for loans to businesses generally eased in the past three months, and demand increased somewhat, according to the Federal Reserve's July 2012 Senior Loan Officer Opinion Survey on Bank Lending Practices. While loan demand from large and middle-market firms strengthened somewhat further in the past three months, loan demand from small firms was unchanged, on balance, over this period. A modest fraction of domestic banks reported that they had eased lending standards on commercial real estate loans in the past three months, while a relatively sizable fraction, on net, continued to indicate that demand for such loans had strengthened. In contrast, foreign survey respondents indicated that standards on such loans were unchanged for the second straight survey and that demand had been noticeably weaker, on net, over the past three months. However, the current standards on all types of CRE loans (construction and land development loans; loans secured by nonfarm, nonresidential structures; and loans secured by multifamily structures) are still tighter than were from 2005 to 2007.

Percentage of CMBS Loans Paying Off Hits New 12-Month Low More bad news from the CMBS sector as the industry continues to work through the 2009 "vintage" loans. According to Trepp, the percentage of CMBS loans paying off on their balloon date hit a 12-month low last month. In May, the payoff rate registered a paltry 29.4%. At the time, that was the lowest reading since October 2010 when the payoff percentage was 22.3%. In July, the payoff percentage was even lower than the May number. In July, only 26.3% of loans reaching their balloon date paid off. The July total was well under the 12-month average of 41.6%. By loan count (as opposed to balance), 53.3% of loans paid off. On the basis of loan count, the 12-month rolling average is now 52.2%. The disparity between the volume-based total and the count-based total indicates that it was mostly small balance loans that managed to payoff in June. Prior to 2008, the monthly payoff percentages were typically well north of 70%. Since the beginning of 2009, however, there have only been four months in which more than half of the balance of loans reaching their balloon date actually paid off.

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Fannie and Freddie's Returns to Profitability Fleeting or Redemptive? Last week, the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corp. (Freddie Mac) had good news to share with investors, announcing second-quarter net earnings of $5.1 billion and $3 billion, respectively, primarily on the reversal of loan loss reserves fueled by improving house prices. While welcome news for the beleagured GSE's, analysts were torn over the long-term implications for the two of the nation's major government sponsored housing finance agencies. Improving housing values are expected to reduce credit losses in their mortgage portfolios, according to Brian Harris, a senior vice president at Moody's Investors Service. However, once the benefit of reserve release runs its course, Harris said he believes the ultimate path for both entities remains unchanged: they will deplete their capital bases because the dividends they'll be paying on their preferred securities will be greater than their earnings. The GSEs' earnings and losses have been driven by loan loss provisioning, which are driven by positive house price appreciation. Second-quarter home prices rose by 3.2% in Fannie Mae's portfolio and by 4.8% in Freddie Mac's. "If the housing market is turning for the better (a highly debated subject), declining severity rates would be a virtuous trend for a few more quarters," Harris said. In trying to quantify the benefits to the GSEs of an improving housing market the GSEs may benefit from a temporary period of lower provisioning as their allowance declines to their 10-year average, Harris said. This suggests the benefit that could accrue to Fannie Mae is $34.7 billion and the benefit that could accrue to Freddie Mac is $19.2 billion. IMPROVED GSE RESULTS MAY EASE PUSH FOR IMMEDIATE REFORM Fitch Ratings, on the other hand, expects that the improved second-quarter financial results will result in easing pressure on Congress and the next administration to pursue far-reaching GSE reform next year. Recent mortgage origination trends for both GSEs have been solid, and Fannie and Freddie are on pace to report one of their largest origination years in recent history. At the same time, both GSEs have been writing some of the highest quality new business seen in recent years, Fitch analyst noted. However, Fitch did also acknowledge that the sustainability of the nascent U.S. home price recovery remains uncertain, and it said Fannie Mae and Freddie Mac's results could be volatile over coming quarters.

Watch List: $731 Mil. of Properties in the News This Week Facing Distress Information for these listings was provided by Trepp LLC, an industry leader in providing surveillance data on loan and commercial real estate performance underlying the CMBS market and CoStar Group. Property Property CMBS; Special Name Address Cur. Bal. Type Servicer Comment Media research company Nielsen is considering a move from about CS 2006-C3; C- 224,000 square feet here to take 770 Broadway, New III Asset 160,000 square feet at MetLife’s 770 Broadway York, NY $353,000,000 Office Management 85 Broad St. Cobalt 2007-3; CWCapital 2 Rector 2 Rector St., New Asset Moved into special servicing for Street (3) York, NY $100,000,000 Office Management imminent default. MSC 2007Auction bid this week of $25.075 Arkansas and HQ13; C-III million did not meet reserve price; The Pier at Missouri avenues, Asset C-III will continue marketing the Caesars Atlantic City, NJ $80,500,000 Retail Management asset.

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Property Name

Address

Highland Mall Research Commons; University Tech Center; Technology Point I & II

6001 Airport Blvd., Austin, TX 12249 Science Drive; 12501 Research Pkwy; 3045 & 3051 Technology Drive, Orlando, FL

Embassy Crossing

9550-9690 US Highway 19, Port Richey, FL

Cur. Bal.

$63,292,542

Property Type

CMBS; Special Servicer

Retail

JPM 2002CIBC4; LNR Partners

$37,400,000

Office

$33,416,535

Retail

GCC 2007GG11; LNR Partners BS 2005PWR10; C-III Asset Management

Office

Wach 2005C22; CWCapital Asset Management

Talavi Corporate Center

5651 W. Talavi Blvd., Glendale, CA

Executive Office Plaza

134, 135, and 144 Merchant St., Springdale, OH

$20,363,113

Office

Higuera / Hayden Buildings

8550 Higuera St.; 8600 Hayden Place, Culver City, CA

$20,170,000

Office

$23,561,641

JPM 2005LDP4; C-III Asset Management MSC 2007IQ16; C-III Asset Management

Comment Bloomberg reported this week that the property was liquidated this week for $1.5 milliom, triggering total loss to the CMBS of $73 million.

The loan moved into special servicing this week; itmatures on 09/06/2012. Moved into special servicing this week due to imminent default; upcoming maturity in November 2012. Transferred to special servicing this week.Currently, 70% of the NRA is vacant at the property. On 6/12/2012, a default letter was submitted to the borrower for nonpayment of the 6/1/2012 mortgage payment. Transferred to special servicing this week for monetary default. General Electric, which occupied a total of 179,459 sf or 67% of GLA, vacated upon their 03/31/2012 lease expiration date. Transferred to special servicing this week due to maturity default. Per the rent roll dated 05/31/12, the property is 100% vacant.

Crescent Resources Builds Housing War Chest Crescent Resources LLC completed a private offering of $350 million of senior secured notes due in 2017. In addition, the Charlotte-based company closed on $50 million of a $100 million equity commitment from its existing principal equity holders, Anchorage Capital Master Offshore Ltd. and MatlinPatterson Global Opportunities Partners III LP, and entered into a new $50 million revolving credit facility. The company will use the proceeds to make targeted investments, primarily in the residential and multifamily sectors, and to refinance existing debt. "We have a mandate for growth, the financial stability and ability to support it," said Todd Mansfield, president and CEO. "Positive population growth and an attractive cost of living in these markets are increasing demand for both rental and for sale housing, and Crescent is well-suited to meet that demand." Currently, Crescent has 19 master planned communities and seven multifamily communities with 2,200 units under development and an additional 2,900 multifamily units in predevelopment.

Capital Bancorp Takes Restructuring Efforts to Bankruptcy Court Capitol Bancorp Ltd. in Lansing, MI, and Financial Commerce Corp. filed voluntary petitions for reorganization under Chapter 11 U.S. Bankruptcy Code.

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The bank holding will remain in possession of its assets and properties, and continue to operate its network of banks in 10 states. In June 2012, Capitol commenced a voluntary restructuring plan, designed to convert existing debt to equity, which could help facilitate new equity investments in the corporation, as well as to help restore Capitol's capital ratios and ensure its affiliate banks are adequately-capitalized. Existing debt holders were asked to exchange their debt securities for both preferred and common stock of the company. Capitol has been actively seeking to identify external capital sources sufficient to restore all affiliate institutions to "well-capitalized" status in exchange for approximately 47% of the restructured company. It has been looking for an equity infusion of from $70 million to $115 million. The first segment of the restructuring plan, the exchange of Capitol's outstanding trust preferred securities, unsecured capital notes and Series A preferred stock, expired on July 27, 2012. The conditions for the exchange offers were not met. Hence Capitol filed for voluntary chapter 11 reorganization. Since June, Capitol Bancorp also sold its interests in the $90 million Bank of Michigan and the $76 million First Carolina State Bank to separate investor groups in each respective market. Capitol Bancorp's consolidated assets had already declined nearly 33% to $2 billion as of June 30, 2012, from the $3 billion a year earlier. Total nonperforming loans have declined more than 25% from year-end totals. CAPITOL BANCORP CONTROLS THE FOLLOWING BANKS.

Institution Name Michigan Commerce Bank Bank of Las Vegas Sunrise Bank of Arizona Capitol National Bank Indiana Community Bank Bank of Michigan First Carolina State Bank Sunrise Bank

Total Assets ($000)

City

State

Ann Arbor

MI

$719,436

Henderson

NV

$309,739

Phoenix

AZ

$284,528

Lansing

MI

Goshen Farmington Hills

Total Assets ($000)

Institution Name

City

State

Valdosta

GA

$79,487

Albuquerque

NM

$57,326

Lees Summit

MO

$47,530

$158,178

Sunrise Bank Sunrise Bank of Albuquerque Summit Bank of Kansas City Central Arizona Bank

Scottsdale

AZ

$43,574

IN

$110,905

Bank of Maumee

Maumee

OH

$35,338

MI

$87,431

Bend

OR

$31,348

Rocky Mount

NC

$80,047

$27,152

GA

$79,487

Asheville North Las Vegas

NC

Valdosta

High Desert Bank Pisgah Community Bank 1st Commerce Bank

NV

$26,044

Mass Layoffs Lowest Since 2007 Employers in the private nonfarm sector initiated 1,476 mass layoff events in the second quarter of 2012 that resulted in the separation of 262,848 workers from their jobs for at least 31 days, according to the U.S. Bureau of Labor Statistics. Over the year, total extended mass layoff events and associated worker separations were down from 1,810 and 317,546, respectively. In 2012, total events reached their lowest second quarter level since 2007, while manufacturing sector events declined to their lowest level for any quarter in program history (with data available back to 1995).

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The construction sector had 194 extended mass layoff events and 21,825 separations, primarily due to contract completion. This sector accounted for 13% of the layoff events and 8% of the related separations during the second quarter of 2012. Layoffs due to the completion of seasonal work accounted for 44% of extended mass layoff events and 51% of related separations in the private nonfarm sector during the second quarter of 2012. RECALL EXPECTATIONS: UP BUT NOT TOTAL RECALL 64% of the private nonfarm employers reporting an extended mass layoff in the second quarter of 2012 anticipated recalling at least some of the displaced workers-the highest second quarter percentage since 1998. Of those employers expecting to recall workers, 44% indicated the offer would be extended to all displaced employees and 77% anticipated extending the offer to at least half of the workers. Among employers expecting to recall laid-off workers, 75% intend to do so within six months. Excluding extended mass layoff events due to seasonal work and vacation period, employers anticipated recalling laid-off workers in 38% of the events. Among the four census regions, the West recorded the highest number of extended mass layoff events in the second quarter of 2012. California recorded the largest number of extended mass layoff events in the second quarter of 2012, followed by Illinois, Pennsylvania, and New York. Over the year, 38 states reported decreased numbers of extended mass layoff events for the second quarter. The largest declines were in California, Florida, and Pennsylvania.

Loans and Properties Under Surveillance

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Google Canning 20% of Motorola Workforce; One-Third of its Facilities In May 2012, Motorola Mobility became a wholly owned subsidiary of Google Inc. This week, the firm announced plans to reduce its headcount by 4,000 out of a total of about 20,000 employees. One-third of the reduction in force is set to occur in the U.S. In addition to reducing headcount, Motorola Mobility plans to close or consolidate about one-third of its 90 facilities, as well as simplify its mobile product portfolio-shifting the emphasis from feature phones to more innovative and profitable devices. Motorola Mobility owns eight facilities (manufacturing, sales, service and offices), five of which are in the Americas Region (U.S., Canada, Mexico, Central America and South America). It leases 92 facilities, 40 of which are in the Americas. The company said the changes are designed to return Motorola Mobility's mobile devices unit to profitability after it lost money in 14 of the last 16 quarters. That said, investors should expect to see significant revenue variability for Motorola for several quarters, Google reported. Google expects to incur a severance-related charge of no more than $275 million, which it believes will be largely recognized in the third quarter, with the remaining severance-related costs recognized by the end of 2012. Google also expects to incur other restructuring charges related to the actions described above, the majority of which will be also recognized in the third quarter. Last month, Google announced that Motorola Mobility would move its principal executive offices from 600 N. U.S. Highway 45 in Libertyville, IL, to the top four floors and rooftop of Chicago's Merchandise Mart, becoming the landmark building's largest tenant with 600,000 square feet. Motorola Mobility currently owns its 1.18 millionsquare-foot facility in Libertyville.

FedEx Delivering Voluntary Buyouts to Employees As part of a broad plan to improve efficiencies and reduce costs, FedEx Corp. is offering voluntary buyout incentives to certain U.S.-based employees in mostly non-operational staff groups. The vast majority of employees eligible for these incentives are expected to be staff employees at FedEx Express and FedEx Services. The company is currently analyzing which workgroups will be eligible for these incentives, as well as the permitted participation levels. These incentives will not include any changes to retirement eligibility or payments. However, employees who are eligible for this program and are also eligible to retire may elect to accept the buyout and also retire. Further details on the staff reductions are expected to come at FedEx's Investors and Lenders Meeting in Memphis on Oct. 9 & 10.

Closures & Layoffs: 2,800 Workers Facing Layoffs in Coming Weeks Company Sutter East Bay Hospital dba Alta Bates Summit Med Sutter East Bay Hospital dba Alta Bates Summit Med

Address

City

State

Closure or Layoff

2450 Ashby Ave.

Berkeley

CA

Layoff

113

8/27/2012

2001 Dwight Way

Berkeley

CA

Layoff

67

8/27/2012

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No. of Workers Impacted

Impact Date

11

Company Schneider National Carriers Skywest Airlines Assistance League of Southern California (ALSC) Assistance League of Southern California (ALSC) Performance Motorsports Inc. dba JE Pistons Inc. Freedom Communications Inc. Cedars-Sinai Medical Center WDC Exploration & Wells Inc. Mylan Specialty LP Logitech Sleepy Giant Entertainment Inc. Sutter East Bay Hospital dba Alta Bates Summit Med CVS/Pharmacy Dist Ctr/Longs Drug Store Time Warner Cable Freedom Communications Inc. St.Jude Medical Cardiac Rhythm Foster Dairy Farms Dillard’s Universal Lumpers Auburn Regional Medical Center Thales Avionics Hologic

Address

City

State

Closure or Layoff

2356 Fleetwood Drive 5175 E. Clinton Way

Fontana Fresno

CA CA

Closure Closure

1375 N. St. Andrews Place

Hollywood

CA

1360 and 1370 N. St. Andrews Place

Hollywood

15312 Connector Lane

Huntington Beach

No. of Workers Impacted

Impact Date

161 50

Immediately 8/21/2012

Layoff

27

Immediately

CA

Layoff

45

Immediately

CA

Closure

116

8/28/2012

Irvine Los Angeles

CA

Layoff

33

Immediately

CA

Layoff

55

Immediately

Montclair

CA

Closure

54

Immediately

Napa Newark Newport Beach

CA CA

Closure Layoff

267 86

8/24/2012 Immediately

CA

Closure

63

8/31/2012

350 Hawthorne Ave. 2400 Keystone Pacific Parkway 8925 Ware Court & 10450 Pacific Center Court

Oakland

CA

Layoff

137

8/27/2012

Patterson

CA

Layoff

103

Immediately

San Diego

CA

Closure

70

Immediately

625 N. Grand Ave.

Santa Ana

CA

Layoff

33

Immediately

15900 Valley View Court 1860 State St.

Sylmar Salem Colonial Heights

CA OR

Layoff Layoff

82 100

8/24/2012 9/30/2012

VA

Closure

unknown

9/30/2012

Auburn

WA

Layoff

97

9/24/2012

Auburn Seattle Madison

WA WA WI

Layoff Layoff Closure

837 42 130

9/28/2012 9/14/2012 9/30/2012

17666 Fitch 8700 Beverly Blvd. 5566 Arrow Highway 2751 Napa Valley Corporate Drive 7600 Gateway Blvd. 4 San Joaquin Plaza, Suite 200

Southpark Mallo 1402 Auburn Way N, Suite# 362 202 N. Division St. 2811 S. 102nd St. 502 S. Rosa Road

Benihana Cooks Up Sale Leaseback Deal with Cole Affiliates Japanese restaurant operator Benihana Inc. entered into a sale leaseback transaction with various subsidiaries of Cole Real Estate Investments involving 3 Benihana restaurants for a gross purchase price of $47.4 million. Leases will be entered into at the time of closing of the sales, which is expected to be later this month. The timing is being scheduled to occur simultaneously with the closing of the previously-announced acquisition of Benihana by funds advised by Angelo Gordon & Co. The 13 deals are likely to be structured in a similar manner to Cole Credit Property Trust IV's previous deal to acquire four Benihana properties in Florida, Illinois, Minnesota and Texas. Under the terms of those deals,

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Benihana will pay a current annual base rent of $1.36 million or $37.26/square foot for the four properties. The leases will start Aug. 21 and expire on Aug. 31, 2032. The leases will contain six 5-year renewal options. BENIHANA OWNED PROPERTIES 2365 Mansell Road, Alpharetta, GA 30022 1100 West 8th Avenue, Anchorage, AK 99501 7775 Banner Drive, Dallas, TX 75251 21150 Haggerty Road, Northville, MI 48167 276 E. Commercial Blvd., Fort Lauderdale, FL 33308 747 E. Butterfield Road, Lombard, IL 60148 11840 Fountains Way N., Maple Grove, MN 55369 1665 NE 79th Street Causeway, North Bay Village, FL 33141 850 Louisiana Avenue, South Golden Valley, MN 55426 1200 E. Higgins Road, Schaumburg, IL 60173 3602 SE Ocean Blvd., Stuart, FL 34996 150 N. Milwaukee Avenue, Wheeling, IL 60090 1720 Lake Woodlands Drive, The Woodlands, TX 77380

Top 10 CRE Stories of July Want to catch up on commercial real estate news this summer? Here are what our readers picked as the Top 10 stories in July. No. 10. Despite Lack of Rent Growth, Large Warehouse Portfolios Attract Renewed Investor Interest No. 9. CB Richard Ellis Realty Trust Moves Out On its Own, Becomes Chamber Street Properties No. 8. Blackstone Not Finished Making Big CRE Buys No. 7. CRE Bulks Up Alternative Investment Managers' $3 Trillion in Assets No. 6. Pricing Recovery Broadens Across CRE Property Spectrum No. 5. Banks Sharpening Axes for New Round of Downsizings No. 4. Multifamily Strength Enticing Banks Back into CRE Lending No. 3. Approaching a Tipping Point? U.S. Office Rent Growth Lags Despite Rising Tenant Demand No. 2. Bounty Hunting for Single-Family Rentals No. 1. Trustee To Liquidate Once Booming Real Estate Firm

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