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Coffee Talk

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  • | 6:00 p.m. July 27, 2007
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Coffee Talk

+ Raymond James

quarterly a surprise

If you're hearing cheers inside St. Petersburg brokerage Raymond James Financial Inc. it's because fiscal third-quarter profit rose 20%, helped by a big increase in revenue at its banking unit.

The increase was all the more sweet because earnings topped analysts' estimates by 4 cents a share and revenues beat estimates by more than $30 million.

Net income for the quarter ended June 30 rose to $68.35 million, or 57 cents a share, from $56.77 million, or 48 cents a share, a year earlier.

Analysts, on average, had expected Raymond James to report earnings of 53 cents a share. Revenue at the brokerage rose 9% to $688.66 million, beating analyst forecasts of $658.15 million.

"Fortunately, unlike some of the larger firms in the securities industry, Raymond James has virtually no exposure to the sub-prime business," Chief Executive Thomas James said in a statement.

Revenue at Raymond James' bank nearly tripled to $79.22 million from a year earlier, while interest income surged by 52% in the quarter to $191.69 million.

Maybe they're getting a congratulatory banner ready for the football stadium.


+ WCI Communities

stock loses altitude

WCI Communities, the Bonita Springs-based homebuilder that's for sale, saw its stock drop 22% in the five trading days ending July 24 to nearly $12 per share.

WCI's shares (symbol WCI) fell nearly 10% July 23, the day analysts at Deutsche Bank issued a report saying housing demand is falling because buyers are having trouble obtaining mortgages. The shares fell another 5% July 24. Orders for new homes have declined 30% to 40% from year-ago levels in most Florida markets, Deutsche Bank says.

It's hard to separate WCI's stock performance from the general decline in homebuilder stocks, however. Investors have pushed most of them down since the housing downturn started to take hold last year.

But short-sellers may be behind the particularly steep decline of WCI shares. Investors who sell stocks short make money when prices decline. Short interest currently represents one-third of WCI's shares outstanding, according to Bloomberg data.

Speculation about WCI's upcoming second-quarter results may also be behind the stock's recent drop. The company's second-quarter earnings release is tentatively scheduled for Aug. 6 at noon, according to Google Finance.

WCI shares have fallen more than 49% from their 52-week high of $24.20 and they're 44% below the $22 offered by billionaire investor Carl Icahn in the spring. WCI's board rejected that offer. Icahn owns nearly 15% of the company's shares and has proposed replacing the current board at the Aug. 30 annual meeting with a slate that includes Sarasota developer Hugh Culverhouse Jr.

+ Creative Loafing not on

the fringe anymore

Move over, sexed-up personals ads. Creative Loafing, Tampa's hip, urban alternative weekly, is becoming corporate, in its own way.

Recently the Tampa publisher nearly doubled its size when it bought alternative weeklies the Chicago Reader and the Washington City Paper. They have a combined circulation of 215,000.

Loafing already owns papers in Atlanta, Sarasota and Charlotte, N.C. Those four have a circulation combined of 275,000.

This is expected to move page views on its Web site to more than 10 million per month. After starting in Atlanta, the company expanded to Charlotte in 1987, to Tampa in 1988 and to Sarasota in 1999.

The acquisition means more than circulation. Certain financial, technology and production operations will move to offices in Tampa and Atlanta.

+ Lee County considers

raising taxes...again

When revenues are down, at least one county has a solution: Raise taxes, and then raise taxes some more.

Despite the sharp drop in new-home construction and its impact on everything from furniture to restaurant sales, Lee County is planning to raise taxes on builders again.

The county's commissioners are reviewing a proposal to increase taxes on new construction to pay for parks by 45%. The tax for a single-family home could increase from $1,479 to $2,150 for the parks tax. The reasoning: Rising land values and costs for construction and insurance.

Coffee Talk wonders whether commissioners are still stuck in 2005. While residential land prices haven't fallen dramatically yet, they certainly haven't been rising lately. Meanwhile, construction costs have declined and insurance rates have stabilized.

Public hearings on the matter are scheduled Sept. 25 and Oct. 9. 

+ What housing slump?

Not in Tampa

The online edition of Forbes magazine says the Tampa Bay area is the No. 1 area in the country to buy a house.

But what about the real estate slump? According to Forbes, because of the area's strong, growing economy and modest housing prices, the Bay area is a great recovery market.

The online report says the Bay area will have a "V-shaped" recovery where the market will have a free fall but rebound sharply once it hits bottom.

To get on the Forbes top 10 list, a region needed an oversupply of real estate with plenty of sellers looking to strike a bargain. Forbes also sought areas where prices wouldn't fall drastically.

Tampa Bay home prices should bottom out in the first quarter of 2008, once the region burns off excess inventory from speculators who overbuilt in 2005, according to the report.

The top 10 housing markets, according to Forbes, are Tampa, Minneapolis, Miami, Kansas City, Chicago, Phoenix, San Diego, Milwaukee, New York and Atlanta.

+ Perlman opens NYC

home for charity

Music lovers take note: World-renowned violinist Itzhak Perlman is opening up his New York City home for an intimate concert Oct. 30, with the proceeds going to support the Sarasota-based Van Wezel Foundation and the musician's popular winter residency program.

The day after the first concert, to be held inside Perlman's Upper West Side Manhattan apartment, guests will be invited to another private show with Perlman, this time with his students at the Neue Gallery on Fifth Avenue.

A close up with such violin greatness, though, doesn't come cheap: The cost for both concerts is $5,000 per person.

The Van Wezel Foundation, which supports music, shows and other activities relating to the downtown Sarasota concert hall, partnered with the Perlman Music Program three years ago. Students participating in the Sarasota-based winter residency program receive two weeks of instruction directly from Perlman.

Contact Elizabeth Power with the Perlman Music Program at (941) 955-4942 for more information on the concerts.

+ Sembler Co. plans

ambitious project

Sembler Co., the St. Petersburg retail developer known for BayWalk in St. Petersburg and Centro Ybor in Ybor City, is planning its biggest development to date. But it's not in Florida.

Sembler announced plans recently for Briarcliff Town Center, a $1 billion mixed-used development in the Atlanta suburbs of Dekalb County.

Briarcliff, a 107-acre project, will include two hotels; 3,700 condominium units and apartments; 300,000 square feet of offices; and 1.5 million square feet of retail space. It already has agreements with four department stores to anchor the space.

Southwest singles out Fort Myers

Southwest Airlines CEO Gary Kelly singled out Fort Myers in the airline's second-quarter earnings announcement on July 18.

Kelly says the company has been pleased with the customer response from six growth markets, including Fort Myers, the only Florida city he mentioned.

That's a good sign that Southwest may be expanding its presence in the City of Palms. Since it started service nearly two years ago at Southwest Florida International Airport, the airline is now the airport's fifth largest carrier in terms of passengers carried so far this year (see table). But it's growing. In June, only Delta carried more passengers than Southwest in Fort Myers.

Since Southwest inaugurated Fort Myers service, it has added extra flights on its Chicago and Orlando routes from Fort Myers. Local tourism and airport promoters hope the airline will expand its Fort Myers nonstop destinations to cities west of the Mississippi River.

Largest airlines at Southwest Florida International Airport (For the first six months of 2007)

Airline Total passengers

1. U.S. Airways 557,804

2. Delta Air Lines 528,195

3. Air Tran 517,969

4. JetBlue Airways 482,925

5. Southwest Airlines 411,152

Source: Lee County Port Authority


the seed

The ever-changing real estate market constantly finds new ways to move properties, often using the ever-expanding universe of IRS rules and regulations.

There are 1031 exchanges and more recently tenants-in-common as ways to buy, sell and own commercial real estate. And now there is a growing niche known as 561 exchanges.

One program dealing in these, SeedAmerica, based in Atlanta, has hired Sarasotan Michael Pink to be its endowment growth director. Pink is nationally known for his sales training seminars and has written several books, including Selling Among Wolves, How to Manage a Million Dollars or Less and Profiles in Success. He founded the Rainforest Institute in Panama and is a board member of SeedAmerica.

SeedAmerica is a non-profit 501(c)3 organization that specializes in the purchase and transfer of underutilized, stressed properties by providing maximum tax benefits to the corporate owners. These properties are generally paid for, fully depreciated and been on the market for awhile.

This method has been particularly useful in older industrial buildings in the Midwest - such as a ConAgra building in Ohio - but the right type of property can work anywhere, according to the group.

SeedAmerica's mission is near and dear to many Coffee Talk readers: To strengthen American businesses and entrepreneurs through education and training. It obtains these properties and leases them or sells them to raise money for its endowment to ultimately begin a business college.


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