Joseph N. DiStefano
The U.S. Department of Labor's weaker-than-expected jobs report today fed fears the economy is slowing. Thet gain of just 88,000 jobs for March, down by more than half from January and February, sent stock prices lower, with the Standard & Poor's 500 big-company stock index down 1 percent in early trading.
But the weak jobs report shouldn't have surprised investors, since the economy has already been facing higher labor costs, weak durable-goods demand and slow factory orders, factory analyst John Baliotti told clients at Philadelphia-based Janney Capital Market this morning. Employers have little need to hire, he noted. There'll be no boom this year, but factory orders and investment are up, even if factory hiring isn't, according to Wells Fargo's economists.
Joseph N. DiStefano
Atlantic City's debt, already rated Baa1, could be cut further as its casinos continue to lose customers and value, writes Vito Galluccio, analyst at Moody's Investors Service, in a report to clients today.
Atlantic City real estate property values -- mostly casinos -- has fallen by more than a quarter in value since 2008, to around $16.6 billion, Galluccio reports. (The Borgata is the most valuable property at $1.8 billion, followed by Harrah's Marina at $1.5 billion, the bankrupt Revel at $1.2 billion, and Caesars and the Trump Taj Majal at $1 billion each.)
With Revel bankrupt, with Trump Plaza close to a sale deal for just $20 million (it's still assessed at around $250 million), casinos are demanding huge property tax refunds which the city can ill afford. This plus the rise in local unemployument to a national high of 20%, and the rise in the local poverty rate, are all symptoms of the continued drop in gamblers -- to 29 million last year from 35 million in 20005 -- as more are caught by casinos in Pennsylvania, Delaware and New England, Galluccio notes. The city can't keep raising tax rates to balance falling values forever, he warned.
Joseph N. DiStefano
Comcast Corp.'s venture capital arm and Hollywood producer Peter Chernin (Rise of the Plant of the Apes), whose Chernin Group investment arm counts Providence Equity Partners (where Comcast CFO Michael Angelakis used to work) as a major investor, are weighing a $30 million investment in a YouTube production venture, Fullscreen Inc., wites Peter Kafka in a column for AllThingsD here.
Joseph N. DiStefano
"The 27 largest U.S. companies reporting cyber attacks say they sustained no major financial losses, exposing a disconnect with federal officials who say billions of dollars in corporate secrets are being stolen," reports Bloomberg here.
"Those mixed messages have triggered a debate over whether Washington is overstating the damage from cyber attacks or whether companies are understating its impact -- or not disclosing the attacks at all. It also raises questions about whether some companies are painting more alarming scenarios for politicians than for their investors...
"MetLife Inc., Coca-Cola Co., and Honeywell International Inc. were among the 100 largest U.S. companies by revenue to disclose online attacks in recent filings with the Securities and Exchange Commission... Citigroup Inc. reported “limited losses” while the others said there was no material impact... Companies including Amazon.com Inc., Comcast Corp. and Verizon Communications Inc. have been asked by the SEC over the past year to disclose more about cyber attacks than they volunteered in 2011 annual reports."
Joseph N. DiStefano
The 660-lawyer Drinker Biddle corporate law firm is expanding its New York office and shrinking its Philadelphia headquarters. The firm is doubling its Manhattan space at Silverstein Properties' 1177 Sixth Ave. (Avenue of the Americas) tower to 31,000 sq ft, even as it prepares to downsize its flagship office at Brandywine Property Trust's One Logan Center (the old Bell Atlantic buliding) to 155,000 sq ft next year, from the current 209,000 sq ft.
It's not about price. Drinker signed a 10-year lease at the New York tower, where listed rents run in the high $70s"/sq ft. Brandywine is asking rents in the "mid-to-high $30s"/sq ft for the upper floors at One Logan.
While rents are lower in Philadelphia, the city's business taxes take away much of the advantage over other downtown business districts, notes Jeffrey A. Baker of Cresa Philadelphia, one of the brokers who represented Drinker in the New York deal.
Joseph N. DiStefano
Radian Group Inc., Philadelphia, and three other home mortgage insurers have agreed to pay a total of $15 million to settle accusations they paid "improper kickbacks" to lenders to gain new business, in the years before the financial meltdown of 2008, according to a statement today by the government's Consumer Financial Protection Bureau. The settlement awaits approval by a federal judge in Florida.
The companies sell private mortgage insurance to borrowers who can't or won't scrape together at least a 20% down payment for a home. The insurance boosts homeownership costs, and helped mortgage lenders make loans to people who otherwise couldn't have afforded to buy a home during the property price inflation years of the 1990s and early 2000s. The insurers' complex financial arrangements covering the kickbacks were "worthless" to consumers and "inflated" their insurance costs, while boosting insurers' income, bureau director Richard Cordray said in the statement. Radian defended the payments and the practice of "reinsuring" its customers' mortgage insurance policies through firms controlled by lenders that gave Radian business. In a statement, President Teresa Bryce Bazemore said the practices had helped keep the company solvent during the late 2000s economic downturn, and were legal under federal Housing and Urban Development guidelines at the time. Still, the company agreed to pay $3.75 million and stop reinsuring policies so it could "eliminate distractions at an acceptable cost" and keep writing new policies. In New York Stock Exchange trading this morning, Radian traded at above $10 a share, near a three-year high, with little movement following the settlement.
Joseph N. DiStefano
Pennsylvania Gov. Tom Corbett, beset at home by a growing list of popular politicians who want to take his job, is heading to Rio de Janeiro and Santiago de Chile to try to promote Pennsylvania business down there. Officials of Easton medical-tubs maker Fluortek Inc., Jefferson County mining-locomotive maker Brookville Equipment, Drexel University and other Pa. enterprises, will join Corbett at investment seminars, public-official meetings and other events. They'll arrive in Sao Paolo, Brazil's largest city, on April 7, meet with local officials, Pennsylvania tourism promoters and Brazil "investment prospects." visit a Volvo plant and a Pennsylvania college graduates' reunion, then talk to energy producers in Rio de Janeiro.
In Chile they'll meet with President Sebastian Pinera and his mining, farm and foreign secretaries, visit the Port of Valparaiso (which ships a lot of grapes to the Delaware River ports), hold a Pennsylvana exports promotion event, and sign a Memo of Understanding with the Santiago Chamber of Commerce, flying back to the U.S. on April 16.
Joseph N. DiStefano
"Less than a year after Albert Barnes’s art, uprooted from its original home in Merion, Pennsylvania, occupied new quarters, the collector himself has been removed from the Philadelphia museum that now houses his treasures," writes Bloomberg LP's Katya Kazakina here.
"Barnes, a doctor, chemist and all around eccentric, died in 1951 leaving an astonishing collection that included 181 Renoirs. Though his will expressly forbade moving the pictures from Merion," leaders of the Barnes Foundation, aided by the Annenberg, Lenfest, Perelman, Pew and Roberts family fortunes and nearly $50 million in Pennsylvania taxpayer money, broke Barnes' will and moved his pictures to Philadelphia's Benjamin Franklin Parkway anyway, next to the city Art Museum whose elite backers were, to Barnes, enemies of popular and proper art study.
"The new museum opened with a special show that many perceived as an effort to soothe critics of the move. It was called 'Ensemble: Albert C. Barnes and the Experiment in Education,' and told the early history of the foundation from its founding in 1922... It was a tribute to Barnes himself, drawing from archival material... The show also included letters signed by his beloved dog Fidele and its specially constructed little bed. A vitrine celebrated Barnes’s development of Argyrol, an antiseptic useful for the treatment of gonorrhea." All gone now:
Joseph N. DiStefano
The Pennsylvania Convention Center board of directors says it sought applicants from across the United States when it sent a "Request for Qualifications" seeking private firms to show they could handle management, marketing, maintenance, and capital improvements at the sprawling, taxpayer-funded, under-used Center City complex, which is supposed to be a magnet for the tourism industry, one of the few businesses -- besides apartment rehab and construction, and colleges -- that has been growing in Philadelphia.
The result was two locally-based heavy-duty applicants:
- Global Spectrum, the Comcast Spectacor subsidiary that operates convention centers in Miami Beach, Niagara Falls, and dozens of inland towns, plus sports arenas - including the Wells Fargo Center - in the U.S. and abroad.
Joseph N. DiStefano
The government-run Lehigh County Authority has "rid[den] in at 11th hour with the high bid" to win a 50-year lease to operate Allentown's aging water system, writes analyst Ryan Connors in an update for clients of Janney Montgomery Scott. Allentown, advised by the Pennsylvania Economy League, had preferred to bring in Aqua America of Bryn Mawr, American Water Works of Voorhees, or some other private for-profit company, in an attempt to raise cash to fund its public-worker pensions.
But the Authority laid on the money, Connors notes: "At $220 million, LCA's bid exceeds the city's original goal of fetching up to $200 million on the lease." Connors called final approval at this point "a formality," with a resolution expected in Allentown City Council today and the Authority expected to be less controversial for water worker labor unions, activists among the 20,000 ratepayers, and other privatization critics.
What's this mean for Mayor Nutter's efforts to sell the Philadelphia Gas Works, and other Pa. municipal utility sales -- a movement dear to pro-private-business Republicans, anti-government libertarians and other factions? "The result once again confirms the hard reality that, aside from very small bolt-on acquisitions, municipal privatization remains elusive," Connors wrote.
