Wednesday, September 2, 2009

Snippets of Data

Not much in the headlines worthy of a longer discussion, but here are some interesting data points to ponder:
  • ADP reports 298,000 job cuts in August. More cuts, more bad news for employment numbers.
  • An upscale luxury hotel in Stockton is offered at $19 million, just a third of the $58 million in debt, liens and unpaid taxes owed on the property. The hotel opened in late 2007 and was delinquent on its loans by July 2008. But with all 42 condo units unfinished and unsold and an occupancy rate of 25%, it's amazing the place operated for that long. This must be a complete shock to all of those many travelers who demanded an upscale hotel/condo development in Stockton.
  • Speaking of hotels, let's talk about one that is in a location where upscale travelers actually want to go. The Maui Prince Hotel is facing foreclosure. The Morgan Stanley real-estate fund and local developers bought the hotel for $575 million two years ago (aka "the high".) The owners failed to pay the resort's $192.5 million mortgage when it came due in July so the mortgage-holders sued to foreclose. The foreclosure threatens to wipe out the $227.5 million in mezzanine debt held by a UBS fund and the $250 million in equity that MS and its partners put into the property. To add insult to injury, the resort's manager will stop managing the property on September 16th due to a shortage of funds for pesky unimportant things like payroll. So if you hold a reservation after September 16th, you might want to cancel, unless you don't mind washing your own linens.
  • A vacant parcel of land in Miami has sold for $39 million, down from the original price of $88 million in 2006. The deal, which was struck between seller Africa Israel and buyer Falcone Group got tied up by legal issues due to what appears to be a case of buyer's remorse. Sometimes lawyers really do come in handy because the delay bought Falcone enough time to put the screws to Africa Israel, now facing major liquidity problems, who agreed to the draconian price cut. Should you care about a silly $39 million land deal? Not really. But the total value of sales of vacant land through July of this year fell to $636 million, down from $5.5 billion last year. In aggregate, those numbers start to look ugly.

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