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Weekend Roundup

March 15, 2009

Los Angeles’ Largest Private Landowner Might Have to File For Bankruptcy Protection [Link]

According to the WSJ, Meruelo Maddux Properties is contemplating a bankruptcy filing to help it cope with its debt load. The developer has played a part in a large part of Downtown LA’s revitalization but it has now stopped making interest payments on some 26 loans.

This news gives way to what so many other developers will likely begin to experience, if they haven’t already. Over the past five years, developers, flush with cash were running around every major city building “city centers”. Some were smart and got out. Others will benefit from relatively tight supply. But many will suffer at the hands of deteriorating demand, oversupply, and building at costs that now exceed what market demand will support.

Apollo Group May Inject $150M Into Realogy, Franchisor of Coldwell Banker Commercial and Others [Link]

The Apollo Group has said that it may inject $150m more into Realogy to help the brokerage firm avoid violating debt covenants. Realogy was acquired by private equity firms in 2007 for approximately $8.5B. Since then the housing market has deteriorated markedly, and put the company at risk of buckeling under the heavy debt load that was used to acquire the firm. According to Realogy’s website, the company’s…

  • business units which include Better Homes and Gardens Real Estate, CENTURY 21, Coldwell Banker, Coldwell Banker Commercial, The Corcoran Group, ERA, Sotheby’s International Realty, NRT LLC, Cartus and Title Resource Group. 
  • franchise systems have approximately 15,600 offices and 285,000 sales associates doing business in 95 countries around the world.
  • credit ratings for all levels of debt are rated C to CCC- (Junk) by S&P.

National Semiconductor Lays Off 1725

Santa Clara-based National Semiconductor (NSM: 17.90 +0.06%) announced earlier this week that it is laying off some 1725 employees, or about 25% of its global workforce. Approximately 20% of those cuts will be made at its Santa Clara facility.

With sales off so significantly, it is very likely that we will begin to see cuts at other semiconductor companies, as well as increasing amounts of pressure on venture back fabless semiconductor firms.

Tesla Narrowed Down Search To Fremont and Santa Clara [Link]

According to a SJ Business Journal article, Tesla Motors has narrowed down its search to the formerly HP site in Fremont and EOP’s Augustine Drive “campus”. The Fremont site was picked up by Overton Moore a few months ago, and is one of the largest facilities of its kind in the Bay Area.

The former Applied Materials buildings on Augustine drive are quite a bit different product. The roughly 16.1 acre site has sat vacant for a number of years. Equity Office originally had plans to sell the site in 2004-2005 and went into contract with a group out of Southern California, but after that group failed to lure their target anchor (I believe it was Home Depot), they dropped that project. Since then, EOP has been marketing the site as a build-to-suit Class A office project.

Whether the rumours are true or not, any deal will likely hinge on Tesla Motor’s ability to get federal funding. Without it, the future of Tesla itself could be in question.

Ground Lease For Moffett Park Academic Super-Complex Signed [Link]

Moffett Field NasaBack in October there was talk that the nearly decade long talks of an academic-supercampus coming to Moffett Field were gaining steam. The partnership of Bay Area schools and Carnegie-Mellon University to build a $1B, 75-acre campus featuring classrooms, R&D space, labs, and housing is expected to be ready for initial occupancy in 2014, with construction commencing in 2012. According to a UCSC press release, “Development of the site would be undertaken through a public-private partnership. University Associates plans to select and oversee a “master developer,” who would attract the external capital investment required to complete the project, which is expected to cost more than $1 billion. The property will remain in federal ownership, with University Associates and the master developer responsible for managing and developing the site.”

A video of the project is also available for viewing.

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