From the Editor
BY IVANNA C. SUKKAR, EDITOR
In the Past Month
This pas T aug. 2, af Ter weeks of The mains Tream media pos Turing ThaT
The u.s. was near financial armageddon, congress passed and presi-
denT Barack oBama suBsequenTly signed a deal To raise The coun Try’s
This deal averted a U.S. debt default, but rating agency Standard and Poor’s downgraded the
U.S. credit rating from AAA to AA+.
Meanwhile, the Federal Deposit Insurance Corp. continues to close banks across the country.
Through July, 61 banks have been closed this year. Granted, this is far less than the 108 banks
closed from January to July 2010, but with more than five dozen bank failures so far this year,
it’s hard to say that the economy has hit bottom.
Also, as of this past July, financial blog Calculated Risk ( calculatedriskblog.com) listed 995
banks on its “unofficial problem bank list.” Of those almost 1,000 banks, 34 percent were on
the list because of their exposure to commercial real estate lending. Another 15 percent were
on the list because of their exposure to construction and development loans.
It’s likely no surprise that many failed and troubled banks were overexposed to commercial
real estate and construction-related debt. The country may have avoided defaulting on its
debt, but many commercial property owners and developers can’t say the same. Just look
around and you’re likely to see empty office and retail buildings, distressed land lots and
other signs that recovery has yet to pay us a visit.
There is a way to optimize the value of distressed assets if your clients are seeking help, however. As Turn Point Advisors’ Robert Steinberg discusses in his article this month (Page 21),
there are numerous options for buyers and sellers of distressed lots.
And despite banks’ past overexposure to commercial real estate, there appears to be a resurgence in commercial mortgage-backed securities, which may help boost commercial lending.
Private-fund consultant Jerome Sanzo talks more about this revival and what it means on
Retail sales up slightly
WASHINGTON, D.C. — Retail sales in June increased 0.1
percent, according to the U.S. Census Bureau.
Retail sales, adjusted for seasonal variations but not for
prices, were $387.8 billion, which was an 8.1 percent increase from June 2010, the bureau said.
Total sales for this past second quarter increased 7. 7
percent from the same period a year ago.
Retail trade sales were up 0.2 percent in June from May,
and 8. 5 percent above last year, data indicated.
Retail sales: Sept. 14
Consumer confidence increases
NEW YORK — U.S. consumer confidence improved
slightly this past July after two months of declines, according to the Conference Board.
The monthly Consumer Confidence Index increased
from 57.6 in June to 59.5 in July.
In July, the number of respondents indicating economic
conditions were “good” decreased slightly from 13. 7
percent to 13. 4 percent. The percentage of respondents
indicating conditions were “bad” increased from 38. 4
percent to 39 percent.
The percentage of respondents indicating jobs were
“plentiful” remained unchanged at 5.1 percent, while
the number indicating jobs were “hard to get” increased
from 43.2 percent to 44.1 percent.
This month marks the 10th anniversary of 9/11. Progress is being made on the buildings at the
World Trade Center site, and the entire project is expected to be complete by 2016. Meanwhile,
a memorial for those who lost their lives on 9/11 is expected to open this month.
Consumer Confidence Index: Sept. 27
Durable-goods orders drop sharply
WASHINGTON, D.C. — U.S. durable-goods orders
dropped 2.1 percent in June, a sharp contrast to the 0.4
percent increase economists expected, according to the
In hard numbers, durable-goods orders shrank by $4
billion to $192 billion.
New orders for core durable goods — the figures with
transportation excluded — increased by 0.1 percent.
Excluding defense orders, however, new orders had a
1.8 percent decrease.
… in October’s
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In 2010, Australia’s economy enjoyed a gross-domestic-product growth of 2.7 percent and an unemployment
rate of only 5.2 percent that will likely decrease in 2012,
according to a Cushman & Wakefield report. Office vacancy rates are falling in major business complexes in
Melbourne’s and Sydney’s central business districts
(CBDs). In early 2011, Melbourne had the lowest vacancy
rate in Australia at 6. 3 percent, according to CB Richard
Ellis. Melbourne’s Southbank precinct rate alone may
fall to 4. 3 percent by early 2012, CB Richard Ellis anticipates. Likewise, the vacancy rate in Sydney’s CBD has
decreased from 2010’s midyear results to 8.2 percent,
according to Cushman & Wakefield.
Beige Book shows economic growth slowing
WASHINGTON, D.C. — The U.S. Federal Reserve’s July
Beige Book report said the economy was growing, but
at a slower pace than in the previous report.
Across the board, the 12 Fed districts “indicated that
economic activity continued to grow; however, the pace
has moderated in many districts,” the Fed said.
Consumer spending, estimated to make up about 70 percent of the economy, “increased overall,” the Fed said.
Spending in New York, Cleveland, Chicago, Minneapolis and Dallas improved, while spending in the Fed’s
Philadelphia and Kansas City districts “noted relatively
The Fed said manufacturing activity “expanded overall.” The residential real estate market was “little
changed,” but nonresidential real estate improved
around Boston, Philadelphia, Cleveland, Chicago, St.
Louis and Dallas.
Credit conditions were “little changed,” the Fed said,
while business in the energy sector “remained strong.”
U.S. Federal Reserve’s Beige Book: Sept. 7
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