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Inquirer Daily News

Archive: January, 2012

POSTED: Tuesday, January 31, 2012, 3:44 PM

UPDATE: Haverford School District business manager Robert Henderson says the district's financial situation is improving; the rate cut won't immediately boost borrowing costs; it's "not cost effective" to terminate the swaps yet; and he hopes Moody's will reconsider next year.

EARLIER: Moody's Investor Service has cut Haverford Township School District's credit rating for $113 million in previously issued bonds debt by two notches - from "high-quality" Aa2 to "upper medium grade" A1 - and threatened further cuts, which could drive up the Delaware County school district's future borrowing costs.

In a report, Moody's analyst Shannon McCue cites Haverford's "high debt burden," two years of budget deficits, and "significant variable-rate and swap exposure."

POSTED: Tuesday, January 31, 2012, 3:26 PM

Philadelphia's slow-growth economy, based disproportionately on health and education businesses, didn't suffer the real estate price inflation of the 1980s-90s-2000s, but it hasn't crashed like the go-go-markets, either -- we like to tell ourselves.

But that's not what the numbers say. More than 1 in 8 Philadelphia-area investment-grade real estate loans used to back commercial mortgage-backed securities has gone delinquent, according to the Horsham-based Morningstar Credit Ratings LLC agency. That's not so bad as in the Sunbelt disaster areas of Atlanta, Phoenix, Las Vegas, and Riverside, Calif., where roughly 1 in 5 CMBS loans aren't getting paid. But it's a lot more, proportionately, than have gone bad in Chicago, Los Angeles, or New York, according to Morningstar.

"Defaults always are driven by the performance of the underlying collateral (property) and the credit strength of the borrower," and the borrower's willingness/ability to put up more cash, Morningstar CMBS Analytical Servcies managing director Frank A. Innaurato told me. Those factors "are most definitely affected by the relative health" of "specific property types in given markets" -- local economic conditions.

POSTED: Tuesday, January 31, 2012, 2:43 PM

The Philadelphia area's surviving banks (those that haven't been absorbed by lenders from second-tier, AFC-type cities, from Pittsburgh, Charlotte, or, lately, Buffalo) have been reduced to retaining homely home mortgage loans on the books, instead of selling them to raise cash for more.

They also face "weak commercial loan demand" in this area, and chronic low interest rates nationwide, writes Jason O'Donnell, bank analyst at Boenning & Scattergood in West Conshohocken, after inspecting the year-end 2011 books at Bryn Mawr Trust, Beneficial Bank, and other local lenders.

The result of the banks' practice of keeping more loans, instead of selling them, is that some banks look on casual inspection like they're lending more, but they're not, really. Which means less money is going into business expansion, hiring, construction...

POSTED: Tuesday, January 31, 2012, 2:01 PM

Newt Gingrich- and President Obama-backers are using Republican presidential front-runner Mitt Romney's record as boss of private-equity buyout firm Bain Capital against him. That's provoked a ringing defense of "P.E." by Andrew T. Greenberg, managing partner at investment banking firm Fairmount Partners and chief executive of GF Data Resources, a Conshohocken firm that tracks private-equity deals.


Andrew T. Greenberg

Private equity has prospered, maybe to the point where a private equity exectutive will be our next President, because "shareholder democracy" - the whole post-World War II network of publicly-traded, regulated companies, owned by mutual funds and other broad-based investors - "just doesn't work anymore," Greenberg writes: 

I work with private equity firms every day, as an investment banker and as head of a company that collects and publishes information on the transactions they complete.

POSTED: Tuesday, January 31, 2012, 10:21 AM

Average U.S. home prices slipped in November to the lowest they've been since 2003, according to the authoritative Case/Shiller Index numbers released by Standard & Poor's today. Read them here, check out particularly the second chart, which compares prices over the years. (Real prices have fallen still further, if you consider the effect of inflation).

Philadelphia home prices are also down, according to eConsult economist Kevin Gillen - though financial data processer Fiserv, working off Case/Shiller data, predicts they'll start rising again this fall, my colleague Al Heavens reports here.

Home prices started falling in the mid-2000s after a generation of rising prices fed, especially in the Clinton-Bush years, by easy-money policies, cheap credit, and high demand from Wall Street investors for mortgage-backed securities.

POSTED: Tuesday, January 31, 2012, 9:48 AM

Hill International, Marlton, says it's been hired by Penn State as a project manager at the $39 million Greater Philadelphia Innovation Cluster building at the Philadelphia Navy Yard site. The building is designed as an energy-efficient "retrofit" of an existing 38,000-sq-ft building, for use as offices and labs by energy development companies and other small firms the group hopes to lure to South Philly with help from federal financing. 

Design work is underway; construction should begin in November, Hill spokesman John Paolin told me.

Besides Penn State, the group funding GPIC includes the city and Chamber of Commerce-sponsored Philadelphia Industrial Development Corp., state-funded Ben Franklin Technology Partners of Southeastern Pennsylvania, Delaware Valley Industrial Resource Center, University of Pennsylvania's Wharton Small Business Development Center, "and numerous other public and private partners," according to a statement by Hill.

POSTED: Monday, January 30, 2012, 3:18 PM
190 Rittenhouse Circle
Action Manufacturing has bought the 128,000 sq.ft. former Ferag Inc. printing-automation equpiment plant at 190 Rittenhouse Circle, Keystone Industrial Park, Bristol.

Updated with additional info:

Action Manufacturing, a North Philadelphia-based maker of military electronic fuses ("fuzes") and detonators, has bought the former 128,000 sq ft Ferag Inc. printing-equipment plant, 190 Rittenhouse Circle, Keystone Industrial Park, Bristol, for $6.125 million. Brokers Larry Bergen and Andy McGhee of Colliers International, Philadelphia, handled the sale. The company also owns a 200-acre, 75-building explosives plant near Atglen, Chester County.

Action almost didn't make it to Bristol. Action boss Arthur Mattia had been considering moving the plant and 125 jobs from its aging buildings on the St. Christopher's Hospital campus at 2nd and Erie - all the way to North Carolina. That state is trying to attract military industrial jobs as its textile mills and other manufacturers (which NC once poached from up North) flee to low-wage China. North Carolina's pitch included an in-person appeal from Gov. Bev Purdue.

POSTED: Monday, January 30, 2012, 12:16 PM

Doug DeVos, second-generation boss of consumer-marketing giant Amway and newly elected chairman of the Philadelphia-based National Constitution Center's executive board, tells how, as he sees it, the message of America's founding document isn't that different from what his company has found in its rapid expansion through Asia: "Economic freedom leads to personal freedom. If you just have economic freedom, you're missing the point," which is improving life "for people. Not money."

The rule of law - a written law accessible to all - creates "an environment where people can be rewarded for the work they do," DeVos says. "It maybe isn't perfect," though he declined to suggest what might be added or cut to improve it. "It can be made more perfect. I love that part of the premise. We believe in better."

What's DeVos doing at the Constitution Center? His father, father, billionaire Amway cofounder, Christian philanthropist, and Republican donor Richard DeVos, gave $10 million in 2003 when it opened, and told his extended family to show up when President Clinton came to the dedication. Doug showed up. He liked Philadelphia, and what he heard about the founding document: "Half the countries around the world are now like ours," with written rules. "The beauty of it: you can disagree, and still be a patriot. The Constitution gives you that right."

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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