Wednesday, July 23, 2014
Inquirer Daily News

POSTED: Tuesday, July 15, 2014, 2:06 PM

UPDATE: "S&P announced its new Local Government criteria change last year after a period of rigorous assessment and feedback from the market," Alex Ortolani, spokesperson for the credit rating agency, tells me. S&P laid out its the new criteria, which had the effect of boosting credit ratings for cities like Philadelphia, here. S&P also challenges anyone who thinks it's too easy to check out its "credit scenario builder,” which "allows anyone to test the model we use for rating a local government, or to match against their own model," here. See also S&P comments in Barron's here.

EARLIER: Philadelphia was so happy when the Standard and Poor's credit-rating agency boosted the city's rating to A+ last December -- up two notches, and a notch higher than rival Moody's Investors Service -- that the city issued a press release two days before Christmas, bragging that it now enjoys its "highest rating ever" -- weak hiring, public school layoffs, underfunded pensions and all.

But S&P, in upgrading hundreds of communities like Philadelphia recently, is taking a "questionable" and over-optimistic view of taxpayer-financed local-government borrowing, writes municipal credit analyst Tom Kozlik and managing director Alan Schankel, in a report to clients of Janney Capital Markets. Rival Moody's is, rightly, more skeptical, they add.

POSTED: Tuesday, July 15, 2014, 1:31 PM

Rita's Italian Ice, the 600-store Trevose, Pa.-based chain founed by Philadelphia ex-firefighter Bob Tumolo and owned since 2011 by Michael Lorelli's Falconhead Capital, a New York buyout firm, says it has awarded its largest-ever franchise-development agreement to East Bay Ice Empire Inc. to add 75 stores employing over 500 people in six populous California counties to the east of San Francisco.

The team includes President Lisa Pina-Rasmussen, Matt Seever, Misty Young and Sandra Bourasa. At least two of the investors also operate businsses for ACN Inc., a multi-level marketing company that some observers compare to Amway. In a statement, Pina-Rasmussen said she hopes to repeat the chain's recent growth in Southern California. The group is seeking franchisees at NorCalICE.com  Rita's operates in 21 U.S. states, with outposts in Canada, China, India and the Dutch Caribbean, ceo Jeff Moody said in a statement.

Separately, Saladworks, the Conshohocken-based salad restaurant chain, says it plans to open stores in Boston, Rochester, Virginia Beach, Ft. Lauderdale, Morgantown, and towns in Tennessee and Michigan later this year, and has added stores in Vancouver, Canada and Raffles Place, Singapore, with others planned for Qatar and Dubai, ceo Paul Steck said in a statement.

POSTED: Friday, July 11, 2014, 4:35 PM

"Philadelphia Fed President Charles Plosser said the Fed risks losing credibility by waiting too long to raise rates, and economic data are already suggesting a need to tighten policy. Chicago’s Charles Evans and Atlanta’s Dennis Lockhart countered that low inflation and labor-market slack will allow the central bank to wait until the second half of 2015 or 2016," reports Bloomberg here.

Plosser, a conservative economist who thinks the Federal Reserve should focus on managing interest rates and inflation expectations because it can't effectively fight unemployment, was rated last year as the worst of the 15 Fed regional presidents and other senior Fed officials at predicting the actual direction of interest rates, inflation and unemployment, the Wall St. Journal reported here. 

But Plosser is still trying to get it right. He told Bloomberg TV today that “we are closer than a lot of people might think” to the first interest-rate increase since 2006. Wait too long, he said, and “we’ll lose credibility. We may lose control of inflation.” He's not completely alone: "St. Louis Fed President James Bullard warned this week that inflation will rise above the Fed’s target late next year," Bloomberg said. Plosser added: “We are on a path that says low for long and we have no plans to raise interest rates anytime soon, yet as the data keeps telling us, we ought to be raising rates.” Unemployment fell to 6.1% in June, lowest since 2008. Inflation remains below the Fed's 2% target. 

POSTED: Friday, July 11, 2014, 10:55 AM

"Unfortunately for Comcast," despite the "powerful lobbyists" working to push approval of its planned acquisition of Time Warner Cable, the Federal Communications Commission has put together a merger review team that don't look likely to "rubber stamp" anything, writes bond analyst Dave Novosel in a report to clients of Gimme Credit LLC, new York.

Team includes:
   - William Rogerson, Northwestern U economist and ex-FCC Chief Economist, who opposed the Comcast/NBC deal on grounds of "significant competitive harm, while pay TV customers would face huge increases"
   - Hilary Burchuk, "who represented the Justice Department in its lawsuit against the proposed merger of AT&T and T-Mobile," which the goernment ultimately rejected -- "the position several critics have taken with regard to the Comcast acqusition of TWC"

That adds up to "intense scrutiny." Novosel still thinks the deal will be approved -- with conditions: more customer divestitures, "additional net neutrality promises," guaranteed content.

POSTED: Friday, July 11, 2014, 10:20 AM

Computer parts maker Vishay Intertechnology Inc., Malvern, says it has agreed to pay shareholders $205 million ($Taiwan 139 a share) to buy Taiwan-based optoelectronics maker Capella Microsystems Inc., deal scheduled to close in September.

"Capella makes optical sensors such as ambient light sensors and proximity sensors and we think will be a good addition to Vishay's portfolio," analyst J. Steven Smigie told clients of Raymond James Equity Research in a report this morning. Capella has a comfortable 30% operating profit margin; the sale is priced at 2.5X this year's sales, in hopes Capella will gain clients in Korea's electronics assembly industry; Vishay will likely keep Capella's bosses and staff.

Smigie adds that "Vishay's existing R&D efforts in the opto area" makes Capella "a good set of technology to add, as sensors are being adopted into multiple new end-markets at an increasing pace.

POSTED: Thursday, July 10, 2014, 1:54 PM

New Jersey economic development officials have approved a $26 million a year, 10 year taxbreak for Holtec, a Marlton power plant parts maker that wants to start building nuclear power plants, so it can build a plant employing 235 new and 160 relocated workers in Camden, reports my colleague Maddie Hanna here.

Holtec currently makes heat exchangers, nuclear fuel containers and other large parts at an old Westinghouse factory near Pittsburgh and a second facility in Ohio. It is building another plant in an export zone in India, and has a proposal to add a factory in South Carolina. Holtec is developing what it calls the model SMR-160 small nuclear reactor with help from PSEG, New Jersey's dominant utility, which hopes to install the units at its Hope Creek-Salem nuclear facility, if federal nuclear officials approve its plan on schedule next year.

The new factory would employ hundreds making parts for the nuclear plants as well as more conventional parts. The state says Holtec won't handle nuclear fuel in Camden. More from Julia Terruso and Maddie Hanna here; more on Holtec here.

POSTED: Thursday, July 10, 2014, 11:21 AM

In 2011, Brandywine Property Trust bought 1919 Market Street -- "one of the central business district's most desirable development sites," as Timothy B. Monahan of office tenant rep Savills Studley puts it in a new report, "Philadelphia's Trophy Office Market." Once slated for high-rise offices, later for housing, after 3+ years with Brandywine, it's still a fenced, grassy field, amidst the city's busiest office canyon, two blocks from bustling Rittenhouse Square.

Which is smart -- from the landlord's point of view, Monahan adds: "This purchase allows Brandywine to control another key place on the board and eliminates the opposition from seeking to develop competing office space along this key office corridor. This should add value and vitality to (Brandywine's office) buildings across the street at 1900 Market and Commerce Square." Monahan notes that Brandywine's nearby University City properties at 3020 Market St., the former Post Office, FMC Tower and Cira Center cement the Radnor-based landlord's "dominance in the Philadelphia real estate Monopoly board."

What does Brandywine have planned for 1919 Market, eventually? In June 2012 Brandywine proposed a 292-unit apartment high-rise, plus 55,000 sq. ft. of stores, with backing from neighbor Independence Blue Cross. With apartment towers blooming across central Philadelphia, and more planned, this one hasn't started yet. "A residential project is still planned with an anticipated commencement for fall 2014," Brandywine spokeswoman Marge Bocciuti assures me.

POSTED: Thursday, July 10, 2014, 9:37 AM
An artist's rendering of the proposed data center and power plan on the University of Delaware's campus. (Illustration from datacenters.com)

The University of Delaware says "it has terminated its lease agreement with The Data Centers, LLC, putting a halt to TDC’s plans to develop a data center" and natural gas power plant on the Science, Technology & Advanced Research (STAR) Campus adjoining the partly state-backed Newark, Del. school, after a committee of UD officials and profs "unanimously" voted against the project. Statement here, report link below.

According to UD, administrators and professors in the Working Group assigned to review the proposal "concluded that the proposed facility, which included a 279-megawatt cogeneration power plant, is not consistent with a first class science and technology campus and high quality development to which UD is committed. The findings are detailed in the Group’s report," posted on the UD website. 

Data Centers boss Eugene Kern didn't immediately respond to phone and email messages to his Paoli office. The project had been supported early on by Gov. Jack Markell, UD President Patrick Harker, legislators from both parties, and construction contractors and unions who hoped to build the $1 billion-plus plant, but opposed by Newark neighbors and a unanimous Spring vote of the UD faculty senate, who questioned the large natural gas-burning electric power plant the project's backers included in their proposal.

About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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