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
deBT ceiling.

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 Page 34.

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.

Next release

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.

ivannas@scotsmanguide.com

NEXT;MONTH
BEYOND;OuR;BORDERS

Next release

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 Commerce Department.

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 Scotsman Guide

Find answers to the
following questions:
•;How;can;you;avoid
hard-money mistakes?

•;Are;triple-net;sales-leaseback transactions gaining traction?

•;How;are;Oregon’s commercial markets faring?

•;What;do;SBA;504 enhancements mean for your business?

Australia

… and much more.

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 strong growth.” 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.