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Coffee Talk
+ Continental Airlines
jets out of Sarasota
Talk about the high price of gas.
Filling up a plane with fuel costs so much for Continental Airlines that in September it will be flying out of the Sarasota Bradenton International Airport on a way-ticket, canceling its popular service from the airport to cities such as Cleveland, Houston and Newark, N.J.
But the airline is leaving one thing behind in Sarasota: Its gate and ticket-counter lease, which it pays the airport about $250,000 a year for, remains intact through 2013. So the airline is thus on the hook for at least $1 million in rent, even though it isn't flying any planes out of Sarasota.
A Continental spokesperson says the price of fuel was just too high and the numbers no longer worked, even factoring in the lease payments, which airport officials said is the standard going rate for one gate in an airport of Sarasota-Bradenton's size. The airline is vacating its presence in nine other airports nationwide in September, including its gate at Tallahassee Regional Airport.
Frederick Piccolo, the Sarasota-Bradenton airport's president, tells Coffee Talk he's hopeful that if and when the "fuel environment" changes, Continental will return; the daily non-stop to Newark was one of the more popular flights at the airport, especially from November to April. In the meantime, the gate, which occupies about 10% of the airport's space, will sit empty.
Piccolo, while sympathetic to the 10 or 15 jobs losses the Continental pullout entails at the airport, says the bigger issue is the health of the entire airline industry. "This is the greatest threat and challenge we've had since 9/11," says Piccolo. "Airlines weren't designed to make money with fuel prices at $140 a barrel."
+ What's behind
Riverside Bank shakeup?
The shakeup at Riverside Bank of the Gulf Coast in Cape Coral is not because of pressure from banking regulators, Elmer Tabor, the bank's chairman, assures Coffee Talk.
Riverside Bank President and Chief Executive Officer John Moran resigned recently after overseeing mounting losses from residential-construction lending. In the first quarter, the bank reported a $7.6 million net loss versus net income of $1.3 million in the same period in 2007, according to the Federal Deposit Insurance Corp.
The bank also is letting go 46 employees and closing four branches, two of them inside Wal-Mart stores in Bradenton and Naples. The other two branches closing are Venice Island and Beneva Road in Sarasota.
With all these shakeups, is the bank under special regulatory scrutiny or ordered to shape up? Tabor says regulators didn't force management's hand. Rather, Tabor says the bank needs experienced bankers to sort out loans gone sour because of the dramatic decline in property values.
Riverside founder Vernon Smith will be chief executive officer and Eddie Creamer of Prosperity Bank in St. Augustine will be president. Tabor, who owns Wonderland Realty in Cape Coral, remains chairman.
+ Tampa real estate market
seen as deals and steals
Tampa-area Realtors might want to grab a copy of the June 23 issue of Fortune magazine for office framing.
In it they will find a story that pegs Tampa as one of the top six markets in the country to find a real estate deal under new market realities. Under a heading of "Florida's Gulf Coast metropolis has less glamour - and lower prices," the area joins several other once-hot housing markets nationwide on the list, including Miami, Las Vegas and Phoenix.
"More than other markets, Tampa could be nicely positioned for a rebound," the article states. "Its relatively strong local economy, coupled with the fact that the bust hit here earlier than in some other markets means that the downside may have largely played itself out."
Plenty of business folks might disagree with the "relatively strong local economy" bit, but the overall point could be legit. Deborah Farmer, president of the Greater Tampa Association of Realtors, tells the magazine that prices in Greater Tampa are 50% lower than the market's on Florida's east coast.
The story cites two properties in particular as proof that the market is dotted with good deals. One is a newly built three-story, four-bedroom home in the Robles Park neighborhood, near Ybor City, that lists for $499,000 - about $100,000 less than it would have been selling for in 2005. The second property featured is a 2,300-square-foot bungalow in West Park Village selling for $418,000, about $50,000 off last year's asking price.
The story also singles out Lawrence Yun, the top economist for the National Association of Realtors, as signaling out Tampa as "well-prepared for price recovery, estimating 20% or more price appreciation in the net five years."
A positive comment from Yun though, might not be worth too much. He was one of the last major real estate economists in the country to concede the market was indeed collapsing and as such is derided in some real estate circles for being overly and unrealistically optimistic.
+ Early Father's Day present
for Gulf Coast money manager
Money manager Robert Stovall has just about seen and done it all in his 50-year plus career in the stock markets, from regular TV appearances on Wall Street Week With Louis Rukeyser to working as an analyst at firms such E.F. Hutton and Dean Witter.
Now Stovall, global strategist for Sarasota-based Wood Asset Management, can add one more accomplishment to his mantle: Being featured in the Wall Street Journal in an article that ran the day before Father's Day about the stark difference in investing philosophies between Stovall and his son Sam Stovall, the chief equities strategist at Standard & Poor's.
The elder Stovall is a value stock picker, looking for the under-the-radar companies that the so-called Wall Street gurus and titans have missed or skipped over. His son, on the other hand, follows the growth-investing philosophy, believing that a well-chosen and well-known rising stock can continue to outperform.
The article, "Father, Son Play Together but Invest Apart," was published in the June 14 Journal, on the front of the Money & Investing section. It included a picture of the Stovalls together in New York City.
"It came out really well," the elder Stovall tells Coffee Talk from his New York City apartment, where he spends summers teaching business and investing classes at New York University's Stern School of Business. "I've never seen the Wall Street Journal run a story like that."
+ Banks sell more loans
to clean up books
As a way to strengthen their books, some Gulf Coast banks are selling more non-performing commercial loans, sometimes at a discount, to get the loans off of their books. Sometimes, it's a bank examiner suggesting changes. Sometimes it's the bank wanting a stronger loan portfolio. The bank sells the commercial loan and takes a tax write-off on the remainder if it sells it at a discount.
"There's a lot of that going on," Jim Shimberg told Coffee Talk. Shimberg is partner in charge of the Tampa Bay real estate group for the law firm Holland & Knight.
"There's sort of an industry formed around this," Shimberg says.
In some cases, banks are using loan sale advisors. Some companies, such as RCH Capital, are specializing in acquiring the loans.
+ The Heights shifts
to commercial
The Heights, a 50-acre mixed-use redevelopment project along the Hillsborough River just north of downtown Tampa, has delayed its residential work and will instead focus on the office portion of the project first.
The 30,000-square-foot office building, when complete, will be occupied in part by the Beck Group - the project's builder - and another tenant.
The project has put the work on its 1,900 residential units on hold because of the changes in the housing market, says Jim Shimberg, partner with the law firm Holland & Knight who represents the developers.
The project, which includes single- and multi-family housing and a 100-slip marina, is a public-private partnership meant to revitalize Tampa Heights, a neighborhood just north of downtown Tampa. Neighborhood groups around the site have endorsed the project.
"The city's been very, very supportive," Shimberg says.
Rob Scharar, originally from Lakeland and now an executive with FCA Corp. of Houston, now heads the development team on the project, Shimberg says.
The project has attracted attention from well-known business and political officials in Tampa, include Don Wallace, one of its investors, and Ed Turanchik, who has worked as an adviser on the project.
+ Riverwalk project
gets a boost
Tampa entrepreneur, chief executive and real estate veteran Brenda Doring recently brought a local industry group into the effort to improve downtown.
Doring is incoming president of the Tampa Bay chapter of Commercial Real Estate Women. CREW recently pledged to partner with the city to help finish the Riverwalk project, a pedestrian path along the Hillsborough River, linking many parts of downtown.
Known for her creativity, management and good humor, Doring will draw from the finance, architectural and economic skills of CREW's 150 members to get the Riverwalk done.
But it won't be easy. The project has been going on for years.
+ WCI's next big date:
Aug. 5 and $125 million
Bonita Springs-based homebuilder WCI Communities is going to face its biggest test this summer on Aug. 5. That's when holders of $125 million in bonds will have the option to force the company to repurchase the bonds at 100% of the principal amount.
The solvency of the company is at stake. The company reported just $48.5 million in cash and $1.7 billion in debt as of March 31.
To deal with the looming deadline, WCI recently announced that the board of directors formed a special committee "to evaluate alternative restructuring proposals."
Don Ackerman, who stepped down as chairman but remained on the board when New York billionaire Carl Icahn took that spot last year, will head the committee. Charles Cobb Jr., Hilliard Eure III and Jonathan Macey were also appointed to the committee. Investment bank Lazard Freres & Co. is advising the company.
+ Landowners seek
hotel deals on empty land
Many landowners on the Gulf Coast are trying to sell land once meant for condominiums or other residential projects, to hotel developers.
"I get about three calls a week about this," says Dennis Reed, senior vice president for the Southeast region for The Plasencia Group, a Tampa-based hotel brokerage.
Reed said there could be a five- to six-year supply of condominiums for the market to work through because of an oversupply.
Some property owners bought land, flattened existing buildings, got development approvals, but then saw the residential market fall. So they didn't build and have no income stream from the property.
About a third of the properties the Plasencia Group looks at may be suitable for hotel developers. The developers, despite the economy, are still building new hotels if the location makes sense.
Even if they sell, land owners face a sobering reality: The selling price will be less for a hotel. At the height of the condo craze, property owners could get $800 to $1,000 a square foot.
"That's all disappeared," Reed says. "We might be able to get half the value."
Reed says Naples, Fort Myers and Clearwater Beach are among some of the Gulf Coast markets that could support new hotel development. Tampa's Westshore business district is reaching a saturation point with hotels, he says.
Zoom(ing) into Southwest Florida
Airport and tourism officials on the Gulf Coast are working hard to bring more international visitors to make up for a drop in domestic travel.
So hoteliers in the Fort Myers and Naples areas are buzzing about the newest airline that may fly into Southwest Florida International Airport: Zoom Airlines. The Canadian low-fare transatlantic airline is considering starting new service between Fort Myers and London, England.
Airport and Zoom officials couldn't be reached to confirm the new service, which would mark the first direct international link between Great Britain and Southwest Florida. Already, Air Berlin shuttles German tourists on nonstop flights to Fort Myers from Düsseldorf and Munich.
Zoom Airlines already flies nonstop from London to Fort Lauderdale. A recent deal on its Web site listed one-way fares on that route for $225. The airline offers low-fare service to other European cities, including Paris and Rome.
MARCH CONSUMER-DURABLE SALES
What the data shows: Consumer durable taxable sales in March include the sale of appliances, furniture, home electronics, aircraft, boat dealers, hardware and decorating stores.
What it means: Sales of consumer durables in every area of the Gulf Coast declined more on a percentage basis than the state average. It's no surprise that the continued downturn in residential real estate has resulted in lower sales of appliances, furniture and related businesses. The decline was especially sharp even during the busy home selling season in the spring.
Forecast: Sales of consumer durables will track residential sales. They may recover somewhat in April as home sales increased in many areas of the Gulf Coast, but persistently high oil prices and rising joblessness may force consumers to delay purchases of big-ticket items such as home appliances.
march sales (in millions)
March durable
Area taxable sales Annual Chg.
Fort Myers $70.0 ‑22.5%
Naples $53.5 ‑14.8%
Punta Gorda $16.1 ‑31.4%
Sarasota $67.1 ‑26.5%
Tampa $221.3 ‑20.5%
Florida $2,026 ‑13.3%
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