Financial overhaul and you: Mortgages, debit cards and more ...
By Sandra Block,, USA TODAY
You're not a bank president and you wouldn't know a derivative if someone served you one for dinner. No matter. There are several provisions in the financial overhaul bill that could affect you, especially if you plan to buy a home.
"Consumers have been pounded by the financial crisis, not just from job losses, but from punishing credit card fees and skyrocketing interest rates," said Pamela Banks, senior policy counsel for Consumers Union. "The bill gives consumers a fighting chance."
Here's a rundown of consumer measures in the bill that's headed to the House and Senate for final votes:
Mortgages
• Lenders would no longer be allowed to pay mortgage brokers a commission based on the interest rate for a home loan. Critics have charged that this fee, known as the yield spread premium, encourages mortgage brokers to steer borrowers into risky loans with high interest rates. The law would bar brokers from receiving any compensation tied to the terms of the loan, other than the principal amount. The yield spread premium "is sort of a secret deal between the lender and the broker" that often ends up hurting the consumer, says Ruth Susswein, deputy director for Consumer Action.
The National Association of Mortgage Brokers opposed the provision, arguing that it would prohibit low-cost financing, a popular option for home buyers and refinancers.
The provision would prevent borrowers from paying a portion of their closing costs upfront and rolling the rest into the loan in the form of a higher interest rate. Under the bill, loan originators will be required to collect all of their fees upfront or roll the entire amount into the loan, says Jim Pair, president of the NAMB.
• Prepayment penalties would be limited or prohibited, depending on the type of loan. Lenders won't be allowed to impose any prepayment penalties on certain types of risky loans, such as loans with a large balloon payment. For 30-year, fixed-rate loans, penalties would be limited to the first three years of the loan.
• Lenders would be required to determine that borrowers can afford the monthly mortgage payments, along with insurance, taxes and assessments. For adjustable-rate mortgages, lenders would have to ensure that borrowers can afford the highest rate under the terms of the loan.
This may sound like something lenders are supposed to do, but during the housing boom, many lenders were cavalier about borrowers' ability to repay loans. Stated income, "no-doc" and "liar loans," which allowed just about anyone with a heartbeat to buy a house, were rampant. The credit crunch led lenders to tighten their standards, so in some respects, "Many of these reforms are going to be locking the barn door after the horse is gone," says Keith Gumbinger, vice president of HSH Associates.
Still, lenders have short memories, and without the legislation, there's no guarantee they won't loosen their standards when the real estate market recovers, Gumbinger says. Real estate markets "burn down every 15 or 20 years or so, and the market doesn't seem to learn from past mistakes," he says.
Credit scores
Consumers who are turned down for a loan would be entitled to receive a copy of the credit score that the lender used to make that decision. Consumers would also be entitled to a free credit score if they were offered a loan at a rate that's higher than the one provided to borrowers with excellent credit. You'd have the right to a credit score any time it results in an "adverse action," which could include everything from a job rejection to a higher insurance rate.
However, you won't get a free credit score when you order your free credit reports. Since 2005, all consumers have had the right to a free annual credit report from all three credit bureaus through www.annualcreditreport.com. But the only way to get a credit score is to buy one from one of the credit bureaus or through www.myfico.com.
Mandating free annual credit scores is impractical because lenders and others use many different types of credit scores, says Mark Greene, chief executive of FICO, developer of the widely used FICO score.
For example, some credit scores are tailored for use by credit card issuers, while another is designed for mortgages, he says. "The way out of these woods is to say that the score used in making a lending decision is the score to be provided," he says.
Credit and debit cards
The bill includes a provision aimed at reducing some "interchange fees" — fees banks charge retailers when consumers pay with debit cards. Here's how you could be affected:
• The Federal Reserve Board would be required to determine what constitutes "reasonable and proportional fees" for debit card transactions, which currently run about 1% of the transaction. The National Retail Federation says lower fees could lead to lower prices for consumers, but other analysts doubt consumers will notice much of a change.
Banks have warned that if interchange fees are reduced, they may have to eliminate debit card rewards programs and increase other fees to make up for the lost revenue.
Debit cards issued by banks and credit unions with less than $10 billion in deposits are exempt from the rule. Prepaid debit cards used by government agencies to issue unemployment and other benefits are also excluded.
• Retailers would be allowed to offer consumers a discount for using cash, a check, or a debit card instead of a credit card. However, lawmakers removed a proposal that would have allowed retailers to give consumers a discount for using a card brand that charges a lower fee than a competing brand.
• Retailers would also be allowed to require a minimum purchase before they'll accept a debit or credit card. Currently, retailers are typically prohibited under card associations' rules to set minimums. So if you're used to using your credit card for everything, including a $2 cup of coffee, you may need to start carrying cash.
Consumer loans
A new agency, the Consumer Financial Protection Bureau, would have the authority to regulate mortgages, credit cards, payday lenders, check-cashing companies and lenders that provide private student loans. However, auto dealers' financing and insurance arms would be exempt from the agency's jurisdiction.
The auto industry argued that auto dealers aren't banks and didn't play any role in the financial meltdown. The National Automobile Dealers Association also contended that the additional bureaucracy would drive up the price of auto loans.
Consumer groups maintained that placing auto dealers under the consumer agency's jurisdiction would protect consumers from abusive lending practices by unscrupulous dealers. In addition, exempting auto dealerships' finance departments from regulation could give them an unfair advantage over credit unions and small banks, according to the Cambridge Winter Center for Financial Institutions Policy.
Wednesday, June 30, 2010
Friday, June 25, 2010
Fannie Mae Tightens Up on Loan Defaulters to Discourage Homeowners from Walking Away
Thinking about walking away? You may want to think again. Government-sponsored mortgage purchaser Fannie Mae is trying to encourage distressed homeowners to find alternatives to foreclosure by banning those who walk away from getting new loans for seven years.
A strategic default occurs when a homeowner stops making payments on a mortgage despite being able to do so. It has become increasingly common in communities where housing values fell sharply and homeowners are "underwater," or owe more than their houses are worth.
Fannie Mae said that in locations where the law allows, it also plans to take legal action to recoup outstanding mortgage debt from borrowers who strategically default.
The wave of foreclosures affecting Fannie and Freddie has caused a major problem for the U.S. government, which effectively guarantees the loans. The government seized control of Fannie and Freddie in September 2008, a rescue that has cost taxpayers $145 billion so far. The two companies show no signs of being self-sufficient.
In announcing the new policy, Fannie Mae said homeowners who make a good faith effort to resolve their situation with their mortgage companies, and those who have extenuating circumstances, will be eligible for new loans in a shorter time period.
A strategic default occurs when a homeowner stops making payments on a mortgage despite being able to do so. It has become increasingly common in communities where housing values fell sharply and homeowners are "underwater," or owe more than their houses are worth.
Fannie Mae said that in locations where the law allows, it also plans to take legal action to recoup outstanding mortgage debt from borrowers who strategically default.
The wave of foreclosures affecting Fannie and Freddie has caused a major problem for the U.S. government, which effectively guarantees the loans. The government seized control of Fannie and Freddie in September 2008, a rescue that has cost taxpayers $145 billion so far. The two companies show no signs of being self-sufficient.
In announcing the new policy, Fannie Mae said homeowners who make a good faith effort to resolve their situation with their mortgage companies, and those who have extenuating circumstances, will be eligible for new loans in a shorter time period.
Thursday, June 17, 2010
Foreclosure Rate Steadies, But It Ain't Over Yet
WASHINGTON -- The foreclosure crisis appears to be leveling off.
The number of people facing foreclosure is nearly flat from a year ago, according to the latest report from a private foreclosure listing service. A third fewer people are receiving legal warnings that they could lose their homes. And foreclosures are receding in some of the hardest-hit cities.
Still, the number of foreclosures remains extraordinarily high. Experts caution that a big reason for the stabilization is that banks are letting delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. New consumer protection laws, which vary by state, have also meant borrowers can spend more time in their homes.
A new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy doesn't improve fast enough to lift home sales.
"It's not anything like a recovery yet," said Rick Sharga, a senior vice president at RealtyTrac Inc., a foreclosure listing service.
RealtyTrac reported Thursday that nearly 323,000 households, or one in every 400 homes, received a foreclosure-related notice in May. That was up 0.5 percent from a year earlier but down 3 percent from April. The report tracks notices for defaults, scheduled home auctions and home repossessions.
But in a sign that the crisis is far from over, the number of homeowners who lost their homes to foreclosure hit a record of nearly 94,000 in May. That number may finally peak next year, as lenders try to work their way through millions of delinquent loans.
Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. Now, homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.
A record high of more than 10 percent of homeowners with a mortgage had missed at least one payment as of the end of March, according to the Mortgage Bankers Association. But the number of homeowners just starting to show trouble is trending downward as the economy improves.
"That's a very good thing," said Thomas Lawler, an independent housing economist in Virginia. But he noted that even with that positive trend, "you are highly likely to see an acceleration in the number of actual completed foreclosures."
Lenders are offering to help some homeowners modify their loans. But many borrowers can't qualify or they are falling back into default. The Obama administration's $75 billion foreclosure prevention effort has made only a small dent in the problem.
About 25 percent of the 1.2 million homeowners who started the program over the past year had received permanent loan modifications as of April. About 23 percent of those enrolled dropped out during a trial phase that lasts at least three months. Many more are in limbo.
Among states, Nevada posted the highest foreclosure rate in May. One in every 79 households there received a foreclosure notice. However, foreclosures there are down 16 percent from a year earlier.
Arizona, Florida, California and Michigan were next among states with the highest foreclosure rates. Rounding out the top 10 were Georgia, Idaho, Illinois, Utah and Maryland.
Las Vegas continued to be the city with the nation's highest foreclosure rate, but activity there was down 18 percent from a year earlier. And nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was the Vallejo-Fairfield area in California, where foreclosures were up 1 percent from a year ago.
Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. That's a concern for local communities, and a drag on the economic recovery.
In recent months, home prices have started to sink again after stabilizing last summer. Economists at Goldman Sachs predicted in a report last week that prices will fall about 3 percent nationally over the next year, with the largest declines in cities where mortgage defaults are rising.
"The housing market remains plagued by enormous excess supply," wrote Goldman economist Sven Jari Stehn.
The number of people facing foreclosure is nearly flat from a year ago, according to the latest report from a private foreclosure listing service. A third fewer people are receiving legal warnings that they could lose their homes. And foreclosures are receding in some of the hardest-hit cities.
Still, the number of foreclosures remains extraordinarily high. Experts caution that a big reason for the stabilization is that banks are letting delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. New consumer protection laws, which vary by state, have also meant borrowers can spend more time in their homes.
A new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy doesn't improve fast enough to lift home sales.
"It's not anything like a recovery yet," said Rick Sharga, a senior vice president at RealtyTrac Inc., a foreclosure listing service.
RealtyTrac reported Thursday that nearly 323,000 households, or one in every 400 homes, received a foreclosure-related notice in May. That was up 0.5 percent from a year earlier but down 3 percent from April. The report tracks notices for defaults, scheduled home auctions and home repossessions.
But in a sign that the crisis is far from over, the number of homeowners who lost their homes to foreclosure hit a record of nearly 94,000 in May. That number may finally peak next year, as lenders try to work their way through millions of delinquent loans.
Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. Now, homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.
A record high of more than 10 percent of homeowners with a mortgage had missed at least one payment as of the end of March, according to the Mortgage Bankers Association. But the number of homeowners just starting to show trouble is trending downward as the economy improves.
"That's a very good thing," said Thomas Lawler, an independent housing economist in Virginia. But he noted that even with that positive trend, "you are highly likely to see an acceleration in the number of actual completed foreclosures."
Lenders are offering to help some homeowners modify their loans. But many borrowers can't qualify or they are falling back into default. The Obama administration's $75 billion foreclosure prevention effort has made only a small dent in the problem.
About 25 percent of the 1.2 million homeowners who started the program over the past year had received permanent loan modifications as of April. About 23 percent of those enrolled dropped out during a trial phase that lasts at least three months. Many more are in limbo.
Among states, Nevada posted the highest foreclosure rate in May. One in every 79 households there received a foreclosure notice. However, foreclosures there are down 16 percent from a year earlier.
Arizona, Florida, California and Michigan were next among states with the highest foreclosure rates. Rounding out the top 10 were Georgia, Idaho, Illinois, Utah and Maryland.
Las Vegas continued to be the city with the nation's highest foreclosure rate, but activity there was down 18 percent from a year earlier. And nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was the Vallejo-Fairfield area in California, where foreclosures were up 1 percent from a year ago.
Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. That's a concern for local communities, and a drag on the economic recovery.
In recent months, home prices have started to sink again after stabilizing last summer. Economists at Goldman Sachs predicted in a report last week that prices will fall about 3 percent nationally over the next year, with the largest declines in cities where mortgage defaults are rising.
"The housing market remains plagued by enormous excess supply," wrote Goldman economist Sven Jari Stehn.
Thursday, June 10, 2010
Gourmet Food Carts Come to Cleveland
Recently, Cleveland Public Art, Zygote Press and other partners held an event to celebrate the launch of a new "food cart" program in Cleveland. The idea is to bring healthier alternatives to Cleveland neighborhoods, most notably downtown and University Circle. One of the first of the food vendors in Cleveland (albeit in a truck, not a cart, and not officially in the city's program) are Dim and Den Sum. Stay tuned for more info about the city's new food cart program - and look for expanded food options on the street next time you're about town!
* * *
Q&A: The guys behind Dim and Den Sum
Duo brings first food truck to Cleveland
By Janet Nguyen
Metromix
April 27, 2010
Two long-time friends have reunited to bring a popular food concept on both the East and West Coasts to Cleveland.
Three years ago, Jeremy Esterly, 34, and Chris Hodgson, 24, met while working at Fire Food & Drink in Shaker Square. They became fast friends and stayed in touch even after Hodgson moved to New York City to work at The Spotted Pig. But an idea—now a reality—recently brought Hodgson back home to work with Esterly on this new concept—and when we say new, we mean new to Cleveland.
We're talking food trucks.
What is a food truck? It's exactly that. A truck that serves food. And nothing on the Dim and Den Sum menu is more than $6. The truck is slated to start serving food next month. What kind of food, you ask? Locally-sourced comfort food with an Asian twist to the lunch and late night crowds in and around Cleveland. Where in Cleveland? Well, you'll need to follow them on Twitter and Facebook to find out their exact location on any given day. Just look for the brightly-colored truck with a red, maniacal-looking octopus painted on the side.
When did you two come up with the idea of bringing a food truck to Cleveland?
CH: It was probably about four months ago when we decided to team up. We had ideas about it separately probably half a year ago. When I came back to visit, we talked about it and decided to go with it.
JE: We worked together previously for like six months about three years ago and we hit it off pretty well and had a bunch of ideas then. It was really crazy. We were both talking about it at the same time. It's a good way to start up a restaurant. You get capital from this and work your way up. We were tired of working in a kitchen, tired of putting in long hours for somebody else and we wanted to do something for ourselves.
CH: It was kind of a new territory for both of us and for Cleveland because they don't have any food trucks. We looked into all the codes and everything ... Cleveland's trying to start a food cart program. We've been in contact with the city getting this going. We wrote a business plan, we found a truck and got the truck here to Cleveland. I moved back to Cleveland about three weeks ago. We've just been focusing all on this and doing menu testing and everything like that so that when we open, we can hit the streets with some awesome food.
How did you come up with the name "Dim and Den Sum?"
CH: Jeremy was drunk. [Jeremy laughs in the background]. He called me up and was like, "Dim and Den Sum" and at first, I was like, "I don't know about that." But then, once I started doing research on dim sum, it became a very playful thing for people to say.
JE: I was drinking a lot and I was throwing a bunch of ideas at him. [Looks at Chris]. What else did we have? Flavor Wagon? It was a bunch of stupid, random things and I was drinking heavily and that's what came out of it. The octopus—everything.
How did you come up with the menu?
CH: The menu took a long time. It's in its fourth iteration, fifth iteration. We started just throwing ideas out there and once we actually saw the truck and bought the truck and saw the equipment, we had to tweak it a little bit more. We wanted to stick with the locally-sourced, still going with the best product, but able to get the food out of the kitchen quick enough so people aren't standing around for 10 minutes. We want to run like four to five minutes. We came up with a fun menu that's got a lot of different ideas, an Asian flare to it, but quick enough that people can order and be gone in three to four minutes.
JE: I spent a lot of time in the South with a lot of comfort food, a lot of soul food. So that's what we tried to stick with—things that would make people comfortable. There's a lot of Midwestern comfort foods—tributes to the Polish boy and stuff like that.
CH: I love Asia. It's my favorite continent I've ever been to. Japan, Korea—all those places—I think the way they cook, their techniques, their attention to detail, the different flavor combinations they do ... it has always influenced me and been an awesome part of my cooking.
JE: We're both really into Asian food. Specifically, I think Korean. There's a lot of Korean stuff on the truck like kimchi slaw, and then we make ketchup out of ramp kimchi that we forage. We forage our own ramps. We're making a huge batch of that now, so that's cool.
Is your menu going to change with the seasons?
CH: Absolutely. Whatever we can get that's the freshest and is being produced at that time, we're going to use that to fill our menu up with new creations.
JE: The Dim of the Day is going to change depending on what we can find seasonally. We'd definitely like to feature ramps because I love ramps. And we're featuring them anyway and that's seasonal, and (spring) is such a short season. It's going to change based on what we find at the market. We'll probably do it on Saturdays—go to the farmer's market in Shaker Square and hit up whatever we can find.
When can we expect to see the truck cruising around Cleveland?
CH: May 10 is our official launch date. There is an event we're doing in the Warehouse District on the 7th. Lunchtime on the 7th we'll be in the Warehouse District if people find their way down there. We want to switch off between University Circle and downtown for lunches. 10 a.m. to 3 p.m. (for lunch) and we want to do late night in Coventry, Ohio City, Tremont and downtown from 10 p.m. to 3 a.m. We have iPhone applications coming out, Blackberry applications coming out. We Twitter, Foursquare and Facebook all of our locations and you can also go on our Web site (coming soon) and we'll have a map on there showing our exact location.
Do you think this concept will catch on in Cleveland?
JE: I think it's going to be huge real fast. We're not pioneers, but we're definitely the first to do it here. I think it's going to catch on real quick and hopefully we can partner up with other people in the future too and help them get going. Nobody moves around (in trucks)—we're different with that. Everything we make ourselves ... that's different too.
CH: I think it's going to catch on. If you go downtown or University Circle, you've got thousands and thousands of people right there. If we're offering food that's a lot better than getting a hot dog or something like that at a lower price that's fast, I think it's going to catch on really well.
What are your future plans for Dim and Den Sum?
CH: We hope to have three (trucks) within three months. All three will be different concepts. We're looking at a couple different trucks right now and a couple different ideas that we got. You should see different concepts coming up pretty soon.
JE: Extending the brand and using it and expanding it to do other things. We'd like to do a restaurant at some point. Just basically using this to fund that.
* * *
Q&A: The guys behind Dim and Den Sum
Duo brings first food truck to Cleveland
By Janet Nguyen
Metromix
April 27, 2010
Two long-time friends have reunited to bring a popular food concept on both the East and West Coasts to Cleveland.
Three years ago, Jeremy Esterly, 34, and Chris Hodgson, 24, met while working at Fire Food & Drink in Shaker Square. They became fast friends and stayed in touch even after Hodgson moved to New York City to work at The Spotted Pig. But an idea—now a reality—recently brought Hodgson back home to work with Esterly on this new concept—and when we say new, we mean new to Cleveland.
We're talking food trucks.
What is a food truck? It's exactly that. A truck that serves food. And nothing on the Dim and Den Sum menu is more than $6. The truck is slated to start serving food next month. What kind of food, you ask? Locally-sourced comfort food with an Asian twist to the lunch and late night crowds in and around Cleveland. Where in Cleveland? Well, you'll need to follow them on Twitter and Facebook to find out their exact location on any given day. Just look for the brightly-colored truck with a red, maniacal-looking octopus painted on the side.
When did you two come up with the idea of bringing a food truck to Cleveland?
CH: It was probably about four months ago when we decided to team up. We had ideas about it separately probably half a year ago. When I came back to visit, we talked about it and decided to go with it.
JE: We worked together previously for like six months about three years ago and we hit it off pretty well and had a bunch of ideas then. It was really crazy. We were both talking about it at the same time. It's a good way to start up a restaurant. You get capital from this and work your way up. We were tired of working in a kitchen, tired of putting in long hours for somebody else and we wanted to do something for ourselves.
CH: It was kind of a new territory for both of us and for Cleveland because they don't have any food trucks. We looked into all the codes and everything ... Cleveland's trying to start a food cart program. We've been in contact with the city getting this going. We wrote a business plan, we found a truck and got the truck here to Cleveland. I moved back to Cleveland about three weeks ago. We've just been focusing all on this and doing menu testing and everything like that so that when we open, we can hit the streets with some awesome food.
How did you come up with the name "Dim and Den Sum?"
CH: Jeremy was drunk. [Jeremy laughs in the background]. He called me up and was like, "Dim and Den Sum" and at first, I was like, "I don't know about that." But then, once I started doing research on dim sum, it became a very playful thing for people to say.
JE: I was drinking a lot and I was throwing a bunch of ideas at him. [Looks at Chris]. What else did we have? Flavor Wagon? It was a bunch of stupid, random things and I was drinking heavily and that's what came out of it. The octopus—everything.
How did you come up with the menu?
CH: The menu took a long time. It's in its fourth iteration, fifth iteration. We started just throwing ideas out there and once we actually saw the truck and bought the truck and saw the equipment, we had to tweak it a little bit more. We wanted to stick with the locally-sourced, still going with the best product, but able to get the food out of the kitchen quick enough so people aren't standing around for 10 minutes. We want to run like four to five minutes. We came up with a fun menu that's got a lot of different ideas, an Asian flare to it, but quick enough that people can order and be gone in three to four minutes.
JE: I spent a lot of time in the South with a lot of comfort food, a lot of soul food. So that's what we tried to stick with—things that would make people comfortable. There's a lot of Midwestern comfort foods—tributes to the Polish boy and stuff like that.
CH: I love Asia. It's my favorite continent I've ever been to. Japan, Korea—all those places—I think the way they cook, their techniques, their attention to detail, the different flavor combinations they do ... it has always influenced me and been an awesome part of my cooking.
JE: We're both really into Asian food. Specifically, I think Korean. There's a lot of Korean stuff on the truck like kimchi slaw, and then we make ketchup out of ramp kimchi that we forage. We forage our own ramps. We're making a huge batch of that now, so that's cool.
Is your menu going to change with the seasons?
CH: Absolutely. Whatever we can get that's the freshest and is being produced at that time, we're going to use that to fill our menu up with new creations.
JE: The Dim of the Day is going to change depending on what we can find seasonally. We'd definitely like to feature ramps because I love ramps. And we're featuring them anyway and that's seasonal, and (spring) is such a short season. It's going to change based on what we find at the market. We'll probably do it on Saturdays—go to the farmer's market in Shaker Square and hit up whatever we can find.
When can we expect to see the truck cruising around Cleveland?
CH: May 10 is our official launch date. There is an event we're doing in the Warehouse District on the 7th. Lunchtime on the 7th we'll be in the Warehouse District if people find their way down there. We want to switch off between University Circle and downtown for lunches. 10 a.m. to 3 p.m. (for lunch) and we want to do late night in Coventry, Ohio City, Tremont and downtown from 10 p.m. to 3 a.m. We have iPhone applications coming out, Blackberry applications coming out. We Twitter, Foursquare and Facebook all of our locations and you can also go on our Web site (coming soon) and we'll have a map on there showing our exact location.
Do you think this concept will catch on in Cleveland?
JE: I think it's going to be huge real fast. We're not pioneers, but we're definitely the first to do it here. I think it's going to catch on real quick and hopefully we can partner up with other people in the future too and help them get going. Nobody moves around (in trucks)—we're different with that. Everything we make ourselves ... that's different too.
CH: I think it's going to catch on. If you go downtown or University Circle, you've got thousands and thousands of people right there. If we're offering food that's a lot better than getting a hot dog or something like that at a lower price that's fast, I think it's going to catch on really well.
What are your future plans for Dim and Den Sum?
CH: We hope to have three (trucks) within three months. All three will be different concepts. We're looking at a couple different trucks right now and a couple different ideas that we got. You should see different concepts coming up pretty soon.
JE: Extending the brand and using it and expanding it to do other things. We'd like to do a restaurant at some point. Just basically using this to fund that.
Friday, June 4, 2010
Whoah! Mortgage Rates Drop to 4.78%, the Lowest Level This Year
WASHINGTON -- Turmoil in the stock market and the European debt crisis are making life easier for American homebuyers and families looking to refinance: Mortgage rates are inching closer to a record low.
The window of opportunity may close soon. Home loan rates will rise if investors grow more confident and shift money out of the safety of government bonds, which influence mortgage rates.
For now, though, rates are tantalizingly low. The average 30-year fixed-rate loan sank to 4.78 percent this week, the lowest this year and barely above the record of 4.71 percent set in December. And 15-year loans are at their lowest rates in two decades.
"Strike now," suggested Greg McBride, senior financial analyst at Bankrate.com.
Some homeowners are doing just that. Applications to refinance surged this week to the highest level in seven months, the Mortgage Bankers Association said.
Anxiety over the European crisis has caused global investors to snap up Treasury bonds, which they view as much safer than other investments. Treasury yields have fallen as a result, taking mortgage rates down, too.
When the crisis eases, and especially if the American economy recovery stays on track, expect investors to move out of bonds and back into stocks. That would make mortgages more expensive.
"If the economy finally really shows sustained improvement, rates are definitely going to go up," said Fred Chamberlin, a consultant with Alpine Mortgage Planning in Eugene, Ore.
He suggests that homeowners looking to refinance move fast and not hold out for even lower rates. "If you want the bottom, the only way you're going to know it is when you've missed it," Chamberlin said.
Refinancing isn't right for everyone who qualifies. It typically costs several thousand dollars in fees. Experts suggest calculating how long it will take to recover those fees with the lower loan rate.
As cheap as mortgages are these days, the number of loans being taken out to buy homes remains at its lowest point in more than 13 years. One reason is that a special tax credit for homebuyers expired last month. Many people had rushed to sign contracts by then.
Another obstacle: trouble qualifying for a mortgage. Borrowers need solid credit and a down payment of at least 3.5 percent. Banks tightened lending standards after millions of borrowers fell into default and foreclosure during the housing bust.
"They're really looking with a magnifying glass," said Steve Mevorah, a loan officer with Icon Mortgage Inc. in Las Vegas. "They're trying to make sure that they are flawless loans."
Analysts had expected mortgage rates to rise when the government ended a program designed to bolster the housing market. Instead, they fell because of fears that Greece would default on its debt.
Also keeping rates low is the government's decision last year to provide unlimited support through 2012 for Freddie Mac and Fannie Mae, which buy mortgages and package them into securities and help keep rates low.
Investors "are very comfortable with the guarantee that is in place," notes Credit Suisse mortgage strategist Mahesh Swaminathan. "That, for all practical purposes, is very strong government support."
Since the financial crisis ended, mortgages of all types have become more affordable -- from the 30-year fixed to adjustable varieties.
The premium that borrowers pay to take out "jumbo" loans for more expensive homes has dropped by a full percentage point since late 2008, to just 0.8 percent, for instance.
The window of opportunity may close soon. Home loan rates will rise if investors grow more confident and shift money out of the safety of government bonds, which influence mortgage rates.
For now, though, rates are tantalizingly low. The average 30-year fixed-rate loan sank to 4.78 percent this week, the lowest this year and barely above the record of 4.71 percent set in December. And 15-year loans are at their lowest rates in two decades.
"Strike now," suggested Greg McBride, senior financial analyst at Bankrate.com.
Some homeowners are doing just that. Applications to refinance surged this week to the highest level in seven months, the Mortgage Bankers Association said.
Anxiety over the European crisis has caused global investors to snap up Treasury bonds, which they view as much safer than other investments. Treasury yields have fallen as a result, taking mortgage rates down, too.
When the crisis eases, and especially if the American economy recovery stays on track, expect investors to move out of bonds and back into stocks. That would make mortgages more expensive.
"If the economy finally really shows sustained improvement, rates are definitely going to go up," said Fred Chamberlin, a consultant with Alpine Mortgage Planning in Eugene, Ore.
He suggests that homeowners looking to refinance move fast and not hold out for even lower rates. "If you want the bottom, the only way you're going to know it is when you've missed it," Chamberlin said.
Refinancing isn't right for everyone who qualifies. It typically costs several thousand dollars in fees. Experts suggest calculating how long it will take to recover those fees with the lower loan rate.
As cheap as mortgages are these days, the number of loans being taken out to buy homes remains at its lowest point in more than 13 years. One reason is that a special tax credit for homebuyers expired last month. Many people had rushed to sign contracts by then.
Another obstacle: trouble qualifying for a mortgage. Borrowers need solid credit and a down payment of at least 3.5 percent. Banks tightened lending standards after millions of borrowers fell into default and foreclosure during the housing bust.
"They're really looking with a magnifying glass," said Steve Mevorah, a loan officer with Icon Mortgage Inc. in Las Vegas. "They're trying to make sure that they are flawless loans."
Analysts had expected mortgage rates to rise when the government ended a program designed to bolster the housing market. Instead, they fell because of fears that Greece would default on its debt.
Also keeping rates low is the government's decision last year to provide unlimited support through 2012 for Freddie Mac and Fannie Mae, which buy mortgages and package them into securities and help keep rates low.
Investors "are very comfortable with the guarantee that is in place," notes Credit Suisse mortgage strategist Mahesh Swaminathan. "That, for all practical purposes, is very strong government support."
Since the financial crisis ended, mortgages of all types have become more affordable -- from the 30-year fixed to adjustable varieties.
The premium that borrowers pay to take out "jumbo" loans for more expensive homes has dropped by a full percentage point since late 2008, to just 0.8 percent, for instance.
Wednesday, May 26, 2010
Developers Diversified Survives the Slump
Developers Diversified works toward smart, steady growth
By Michelle Jarboe, The Plain Dealer, May 22, 2010
BEACHWOOD, Ohio -- As Developers Diversified Realty Corp. recovers from the recession, the shopping center owner is unlikely to forget the lessons of a brutal financial crisis.
This time last year, the company's stock price barely topped $4 -- down from more than $70 per share in 2007. Empty stores peppered the company's shopping centers, hurt by big-box retailer bankruptcies. Risk-leery investors were shying away. And some analysts doubted whether the company could cut debt and raise money quickly enough to ensure its survival.
Yet the internationally known real estate company, founded in Northeast Ohio and based in Beachwood, has emerged from intensive care. Chalk part of that up to improved financial markets and a heartier economy, in which retailers are once again considering new stores. But Developers Diversified has made aggressive moves of its own, tapping nontraditional sources of cash, curbing development and installing a new chief executive officer.
As the economy rebounds, the company that became a poster child for real-estate risk now hopes to set another sort of example -- one of smart, steady growth, based on a strategy of creating long-term value instead of short-term gains.
"It's true that the industry historically has a short memory, and that often is discussed," said Daniel Hurwitz, who became president and CEO on Jan. 1. "But we don't.
"We went through a very difficult period of time. We have no intention of doing that again, and we will operate this company with discipline and focus and a keen sense of the history."
Northeast Ohio's real estate community is looking toward Las Vegas this week, as the shopping center industry gathers for an annual leasing conference that starts today.
Real estate companies, developers, retailers and leasing agents are converging at the Las Vegas Convention Center for three days of negotiating, networking and deal-making. And those meetings will have a rosier tint, now that the economy appears steadier, more financing is available and retailers have resumed their search for new store space.
That's a marked contrast to last year, when troubled financial markets and a choppy economy grounded developers and prompted retailers to cancel their trips. Attendance at the annual deal-making conference fell by 40 percent, according to the International Council of Shopping Centers, the trade group behind the event.
This year, expected attendance remains low -- up just slightly from last year at more than 30,000 people. But property owners and retailers are approaching the event with greater enthusiasm, intent on filling empty spaces and planning future expansions.
A few local companies will pitch new construction, including Bob Stark's planned retail project on the former State Road Shopping Center property in Cuyahoga Falls. But money for development remains scarce, and most property owners and managers are focused on existing properties. That presents a challenge for retailers, who already are planning for their 2012 store openings and are expecting that few new shopping centers will be available.
"It will be an industrywide concern as to how we're going to meet those growth plans going forward," said Paul Freddo, senior executive vice president of leasing and development for Developers Diversified Realty Corp.
Developers Diversified Realty Corp.
-- A real estate investment trust based in Beachwood.
-- Founded by Bert Wolstein in 1965 as Developers Diversified Group.
-- Went public in 1993. Traded on the New York Stock Exchange under the symbol DDR.
-- As of March 31, owned and managed 643 retail properties in the United States, Puerto Rico and Brazil.
-- Major tenants include Walmart, Target, Lowe's, Home Depot, Kohl's, T.J. Maxx, Marshalls, Publix Super Markets, PetSmart and Bed, Bath & Beyond.
-- Focused on leasing retail space and exploring redevelopment opportunities in the United States and Puerto Rico. Selectively developing projects in Brazil.
-- Grew through acquisitions until the recent real estate crisis. Now growing by filling empty stores, negotiating new leases, cutting expenses and selling less desirable shopping centers.
The shopping center owner, based in Beachwood, sent about 80 people to Las Vegas. That team will be courting retailers to fill vacant stores and assessing opportunities to improve some shopping centers to meet retailers' expansion needs. The company, which leased a record amount of space during the first quarter, works with tenants including Walmart, Target and T.J. Maxx -- brands that maintained appeal as consumers became more value-conscious.
Last year, retailers called and canceled appointments because they had decided to stay home, said David LaRue, chief operating officer for Forest City Enterprises Inc. This year, however, retailers have been reaching out to set up appointments with the real estate company, which is based in Cleveland and has properties throughout the country.
"We are hearing that retailers are indeed looking to grow," he said. "They do have the opportunity to move up from that B mall to an A mall, and they are going to be looking to improve their real estate position into the better shopping centers."
As of Friday, 1,000-plus attendees from Ohio, more than 400 of them from Northeast Ohio, had registered for the conference. Most were affiliated with real estate companies, developers and retailers. A few cities, including Canton, Medina, Westlake and Willoughby, also planned to send representatives to hobnob with retailers, chat with developers and explore opportunities for partnerships and projects.
Developers Diversified was founded in 1965 to develop Kmart-anchored shopping centers and went public in 1993. At its biggest in mid-2007, the company owned and managed about 800 retail properties. From its Ohio roots, Developers Diversified reached across the country and dipped into Brazil and Puerto Rico. And executives announced joint ventures to develop shopping centers in Russia, Ukraine and Toronto, Canada.
Real estate investment trusts, which pay out most of their taxable income to shareholders in the form of dividends, were hot. In February 2007, Developers Diversified's stock, listed under the DDR symbol on the New York Stock Exchange, traded above $70 per share.
But as signs cropped up that credit was tightening, investors lost their appetite for real estate. When major financial institutions foundered and the stock market tumbled in fall 2008, real estate investment trust stocks plummeted. Between the economic collapse and concerns about the company's debt, Developers Diversified's stock price fell below $1.50 a share by March 2009 -- a 98 percent drop from its peak.
"DDR was left in the gutter to die, effectively," said David Wigginton, a research analyst with Macquarie Capital USA Inc. "I think nobody wanted to touch the stock."
Traditional sources of real estate financing had disappeared, and the company was scrambling for cash. Meanwhile, Circuit City, Goody's, Linens 'n Things, Mervyns and Steve & Barry's -- all tenants at Developers Diversified centers -- went bankrupt and left large stores empty.
"There are lots of external factors that we could point to, that we could certainly say were out of our control," said David Oakes, a former Wall Street analyst and investment manager who joined the company in 2007 and became chief financial officer in February. "That said, I do think we have to own up to operating with a higher risk profile than we should have. . . . We went into an environment where the world got dramatically worse quite rapidly, and we weren't as well prepared for that as we could have been. And that falls on us."
The company slashed domestic development and tabled most of its international aspirations. When property sales proved challenging, executives pursued more unusual sources of capital. Last year, the Otto family of Germany acquired 30 million shares of the company's stock in a deal that made the billionaire real-estate family the largest individual shareholder.
In addition to bringing some much-needed cash, the Ottos demonstrated a major investor's confidence in the company's shopping centers -- just as investors were looking at the portfolio as "sort of a wounded duck," as Hurwitz puts it. The Otto family acquired additional shares in February, bringing its stake in the company to 23.3 percent as of Feb. 24, according to regulatory filings.
In November, Developers Diversified closed on a $400 million loan through a Federal Reserve program meant to revive the market for commercial real estate loans tied to multiple properties. Since then, as financial markets improved, the company has sold shares and issued notes, using the proceeds to reduce debt and address upcoming loan deadlines.
"We were pushed, and we were at the forefront of finding new sources of capital," Oakes said. "But we had to be creative to do it. At this point, the traditional sources are back, and you've seen us access those in some size over the past six months."
The company also has been leaving undesirable partnerships with other real estate investors and pruning its portfolio of lesser properties acquired during the real estate boom. As of March 31, the company owned and managed 643 retail properties.
Good team gets a new coach
Employees, analysts and investors weren't surprised last fall when Developers Diversified said that Scott Wolstein, the son of the company's founder, would be leaving the CEO's job.
A succession plan called for Hurwitz, the chief operating officer, to succeed Wolstein, and rumors about an impending change had been flying since the company's investor day in July. A change at the top was mandated, analysts said, in light of the drubbing the company took during the real estate crisis and some frayed relationships with investors.
"It's sort of like if you have a good team but you need a new coach," said Alexander Goldfarb, a senior real estate investment trust analyst at Sandler O'Neill + Partners in New York. "From a street perspective, it was necessary. . . . There needed to be some responsibility accepted and acknowledgment of that shift, and that's exactly what the company provided."
Wolstein became executive chairman of the company's board. And Hurwitz, a Connecticut native who joined the company in 1999, took the helm.
Analyst Rich Moore, who covers the company from Solon for RBC Capital Markets, described Hurwitz as one of the most talented executives in the real estate industry. Though Developers Diversified still faces significant challenges cutting debt and filling empty stores, Moore applauded the company's progress cleaning up its balance sheet, unloading lower-quality real estate and leasing spaces at its shopping centers.
"He's the right guy to run the company," Moore said of Hurwitz. "He's made a lot of changes, all for the good."
With the leadership transition, management of a real estate empire passed from a local family to a team of executives born and raised outside Greater Cleveland. In an interview, Hurwitz stressed his commitment to Cleveland and said that property sales and strategy changes will not diminish Developers Diversified's presence here. The company owns and manages 33 retail properties in Ohio and recently expanded its Beachwood headquarters, a project under way before the recession.
Developers Diversified employs 735 full-time workers, about 40 fewer employees than two years ago. During the recession, the company froze external hiring and eliminated some jobs. The cuts were much shallower than those at many large real estate companies, and managers tried to find new jobs for employees whose departments or positions were eliminated.
Moore, who has followed Developers Diversified for a decade, said changes in strategy and management helped craft a shift in the company's attitude, which he described as less aggressive and more collaborative.
"I think there's less bravado," Moore said. "I think there's more of a belief that it's important to get done what we say we're going to get done."
As of March 31, the company's total debt balance was $4.7 billion, down from $5.9 billion during the fourth quarter of 2008. The company hopes to reduce debt to $4.4 billion by the end of this year. As shopping-center mortgages approach refinancing deadlines, Developers Diversified is working out new terms, seeking extensions or selling some properties. And executives are focused on replacing short-term debt with longer-term loans.
Investors appear to be responding to this strategy and the team that is implementing it. On Friday, the company's stock closed trading at $11.11 per share, up 20 percent since the beginning of this year.
"Last year, everyone said, 'It's a very nice plan, but we don't even know if you can deliver on that plan,' " Hurwitz said, referencing investor surveys the company has conducted during the past 18 months. "This year, people said, 'That was a very nice plan, and really you've made tremendous progress. Keep going. Keep going.' "
By Michelle Jarboe, The Plain Dealer, May 22, 2010
BEACHWOOD, Ohio -- As Developers Diversified Realty Corp. recovers from the recession, the shopping center owner is unlikely to forget the lessons of a brutal financial crisis.
This time last year, the company's stock price barely topped $4 -- down from more than $70 per share in 2007. Empty stores peppered the company's shopping centers, hurt by big-box retailer bankruptcies. Risk-leery investors were shying away. And some analysts doubted whether the company could cut debt and raise money quickly enough to ensure its survival.
Yet the internationally known real estate company, founded in Northeast Ohio and based in Beachwood, has emerged from intensive care. Chalk part of that up to improved financial markets and a heartier economy, in which retailers are once again considering new stores. But Developers Diversified has made aggressive moves of its own, tapping nontraditional sources of cash, curbing development and installing a new chief executive officer.
As the economy rebounds, the company that became a poster child for real-estate risk now hopes to set another sort of example -- one of smart, steady growth, based on a strategy of creating long-term value instead of short-term gains.
"It's true that the industry historically has a short memory, and that often is discussed," said Daniel Hurwitz, who became president and CEO on Jan. 1. "But we don't.
"We went through a very difficult period of time. We have no intention of doing that again, and we will operate this company with discipline and focus and a keen sense of the history."
Northeast Ohio's real estate community is looking toward Las Vegas this week, as the shopping center industry gathers for an annual leasing conference that starts today.
Real estate companies, developers, retailers and leasing agents are converging at the Las Vegas Convention Center for three days of negotiating, networking and deal-making. And those meetings will have a rosier tint, now that the economy appears steadier, more financing is available and retailers have resumed their search for new store space.
That's a marked contrast to last year, when troubled financial markets and a choppy economy grounded developers and prompted retailers to cancel their trips. Attendance at the annual deal-making conference fell by 40 percent, according to the International Council of Shopping Centers, the trade group behind the event.
This year, expected attendance remains low -- up just slightly from last year at more than 30,000 people. But property owners and retailers are approaching the event with greater enthusiasm, intent on filling empty spaces and planning future expansions.
A few local companies will pitch new construction, including Bob Stark's planned retail project on the former State Road Shopping Center property in Cuyahoga Falls. But money for development remains scarce, and most property owners and managers are focused on existing properties. That presents a challenge for retailers, who already are planning for their 2012 store openings and are expecting that few new shopping centers will be available.
"It will be an industrywide concern as to how we're going to meet those growth plans going forward," said Paul Freddo, senior executive vice president of leasing and development for Developers Diversified Realty Corp.
Developers Diversified Realty Corp.
-- A real estate investment trust based in Beachwood.
-- Founded by Bert Wolstein in 1965 as Developers Diversified Group.
-- Went public in 1993. Traded on the New York Stock Exchange under the symbol DDR.
-- As of March 31, owned and managed 643 retail properties in the United States, Puerto Rico and Brazil.
-- Major tenants include Walmart, Target, Lowe's, Home Depot, Kohl's, T.J. Maxx, Marshalls, Publix Super Markets, PetSmart and Bed, Bath & Beyond.
-- Focused on leasing retail space and exploring redevelopment opportunities in the United States and Puerto Rico. Selectively developing projects in Brazil.
-- Grew through acquisitions until the recent real estate crisis. Now growing by filling empty stores, negotiating new leases, cutting expenses and selling less desirable shopping centers.
The shopping center owner, based in Beachwood, sent about 80 people to Las Vegas. That team will be courting retailers to fill vacant stores and assessing opportunities to improve some shopping centers to meet retailers' expansion needs. The company, which leased a record amount of space during the first quarter, works with tenants including Walmart, Target and T.J. Maxx -- brands that maintained appeal as consumers became more value-conscious.
Last year, retailers called and canceled appointments because they had decided to stay home, said David LaRue, chief operating officer for Forest City Enterprises Inc. This year, however, retailers have been reaching out to set up appointments with the real estate company, which is based in Cleveland and has properties throughout the country.
"We are hearing that retailers are indeed looking to grow," he said. "They do have the opportunity to move up from that B mall to an A mall, and they are going to be looking to improve their real estate position into the better shopping centers."
As of Friday, 1,000-plus attendees from Ohio, more than 400 of them from Northeast Ohio, had registered for the conference. Most were affiliated with real estate companies, developers and retailers. A few cities, including Canton, Medina, Westlake and Willoughby, also planned to send representatives to hobnob with retailers, chat with developers and explore opportunities for partnerships and projects.
Developers Diversified was founded in 1965 to develop Kmart-anchored shopping centers and went public in 1993. At its biggest in mid-2007, the company owned and managed about 800 retail properties. From its Ohio roots, Developers Diversified reached across the country and dipped into Brazil and Puerto Rico. And executives announced joint ventures to develop shopping centers in Russia, Ukraine and Toronto, Canada.
Real estate investment trusts, which pay out most of their taxable income to shareholders in the form of dividends, were hot. In February 2007, Developers Diversified's stock, listed under the DDR symbol on the New York Stock Exchange, traded above $70 per share.
But as signs cropped up that credit was tightening, investors lost their appetite for real estate. When major financial institutions foundered and the stock market tumbled in fall 2008, real estate investment trust stocks plummeted. Between the economic collapse and concerns about the company's debt, Developers Diversified's stock price fell below $1.50 a share by March 2009 -- a 98 percent drop from its peak.
"DDR was left in the gutter to die, effectively," said David Wigginton, a research analyst with Macquarie Capital USA Inc. "I think nobody wanted to touch the stock."
Traditional sources of real estate financing had disappeared, and the company was scrambling for cash. Meanwhile, Circuit City, Goody's, Linens 'n Things, Mervyns and Steve & Barry's -- all tenants at Developers Diversified centers -- went bankrupt and left large stores empty.
"There are lots of external factors that we could point to, that we could certainly say were out of our control," said David Oakes, a former Wall Street analyst and investment manager who joined the company in 2007 and became chief financial officer in February. "That said, I do think we have to own up to operating with a higher risk profile than we should have. . . . We went into an environment where the world got dramatically worse quite rapidly, and we weren't as well prepared for that as we could have been. And that falls on us."
The company slashed domestic development and tabled most of its international aspirations. When property sales proved challenging, executives pursued more unusual sources of capital. Last year, the Otto family of Germany acquired 30 million shares of the company's stock in a deal that made the billionaire real-estate family the largest individual shareholder.
In addition to bringing some much-needed cash, the Ottos demonstrated a major investor's confidence in the company's shopping centers -- just as investors were looking at the portfolio as "sort of a wounded duck," as Hurwitz puts it. The Otto family acquired additional shares in February, bringing its stake in the company to 23.3 percent as of Feb. 24, according to regulatory filings.
In November, Developers Diversified closed on a $400 million loan through a Federal Reserve program meant to revive the market for commercial real estate loans tied to multiple properties. Since then, as financial markets improved, the company has sold shares and issued notes, using the proceeds to reduce debt and address upcoming loan deadlines.
"We were pushed, and we were at the forefront of finding new sources of capital," Oakes said. "But we had to be creative to do it. At this point, the traditional sources are back, and you've seen us access those in some size over the past six months."
The company also has been leaving undesirable partnerships with other real estate investors and pruning its portfolio of lesser properties acquired during the real estate boom. As of March 31, the company owned and managed 643 retail properties.
Good team gets a new coach
Employees, analysts and investors weren't surprised last fall when Developers Diversified said that Scott Wolstein, the son of the company's founder, would be leaving the CEO's job.
A succession plan called for Hurwitz, the chief operating officer, to succeed Wolstein, and rumors about an impending change had been flying since the company's investor day in July. A change at the top was mandated, analysts said, in light of the drubbing the company took during the real estate crisis and some frayed relationships with investors.
"It's sort of like if you have a good team but you need a new coach," said Alexander Goldfarb, a senior real estate investment trust analyst at Sandler O'Neill + Partners in New York. "From a street perspective, it was necessary. . . . There needed to be some responsibility accepted and acknowledgment of that shift, and that's exactly what the company provided."
Wolstein became executive chairman of the company's board. And Hurwitz, a Connecticut native who joined the company in 1999, took the helm.
Analyst Rich Moore, who covers the company from Solon for RBC Capital Markets, described Hurwitz as one of the most talented executives in the real estate industry. Though Developers Diversified still faces significant challenges cutting debt and filling empty stores, Moore applauded the company's progress cleaning up its balance sheet, unloading lower-quality real estate and leasing spaces at its shopping centers.
"He's the right guy to run the company," Moore said of Hurwitz. "He's made a lot of changes, all for the good."
With the leadership transition, management of a real estate empire passed from a local family to a team of executives born and raised outside Greater Cleveland. In an interview, Hurwitz stressed his commitment to Cleveland and said that property sales and strategy changes will not diminish Developers Diversified's presence here. The company owns and manages 33 retail properties in Ohio and recently expanded its Beachwood headquarters, a project under way before the recession.
Developers Diversified employs 735 full-time workers, about 40 fewer employees than two years ago. During the recession, the company froze external hiring and eliminated some jobs. The cuts were much shallower than those at many large real estate companies, and managers tried to find new jobs for employees whose departments or positions were eliminated.
Moore, who has followed Developers Diversified for a decade, said changes in strategy and management helped craft a shift in the company's attitude, which he described as less aggressive and more collaborative.
"I think there's less bravado," Moore said. "I think there's more of a belief that it's important to get done what we say we're going to get done."
As of March 31, the company's total debt balance was $4.7 billion, down from $5.9 billion during the fourth quarter of 2008. The company hopes to reduce debt to $4.4 billion by the end of this year. As shopping-center mortgages approach refinancing deadlines, Developers Diversified is working out new terms, seeking extensions or selling some properties. And executives are focused on replacing short-term debt with longer-term loans.
Investors appear to be responding to this strategy and the team that is implementing it. On Friday, the company's stock closed trading at $11.11 per share, up 20 percent since the beginning of this year.
"Last year, everyone said, 'It's a very nice plan, but we don't even know if you can deliver on that plan,' " Hurwitz said, referencing investor surveys the company has conducted during the past 18 months. "This year, people said, 'That was a very nice plan, and really you've made tremendous progress. Keep going. Keep going.' "
Wednesday, May 19, 2010
Cleveland School District and Cleveland State University Launch Innovative K-12 School
May 13th, 2010
Internationally focused school to serve as a school of choice for Cleveland students and training ground for CSU education students
Today, the Cleveland Metropolitan School District and Cleveland State University announced a collaborative project to launch an on-campus kindergarten-through-12th grade school with a curriculum that is globally recognized for culture, innovation and high standards.
The school, Campus International School, is one of five ‘new and innovative schools’ outlined in the District’s Academic Transformation Plan. Campus International School will incorporate programs from the International Baccalaureate – a Swiss-based, education program renowned for its academic rigor and international curriculum, such as Chinese language classes.
Beginning this fall, the school will accept 120 students in kindergarten, first and second grades with plans to extend classes to the 12th grade by 2015. It will be housed in the First United Methodist Church at the corner of East 30th and Euclid Avenue.
Initially, there will be two classes in each grade consisting of 20 students. The school’s regional draw provides enrollment opportunities for CMSD students, the children of CSU employees and students and students throughout Cuyahoga County. A lottery will determine enrollment if demand exceeds availability.
Campus International School provides yet another educational choice and a university setting for its students. “This school will provide a unique educational experience that is currently unavailable throughout most of the region, and without the burden of tuition,” said Cleveland Schools CEO Dr. Eugene Sanders. “This will set a new urban standard in education, while allowing us to attract some of the best teachers available.”
Campus International School will provide a unique learning environment not just for the school’s young students but also for CSU education students, who will have immediate access to a teaching environment. Similar to a teaching hospital, University students will use the campus school as a hands-on training facility to enhance their classroom experience.
“This is truly a distinctive project on many fronts,” said CSU President Ronald Berkman. “This will provide the city with a unique, high-end education at no additional cost to the parents. But it will also provide the University with a venue to produce new, best-in-class teachers of the future.”
For Cleveland Mayor Frank Jackson, the project is a step toward reversing the flow of urban sprawl and drawing new families back into the city.
“For the City of Cleveland, the school represents a viable new option for younger families who want to live downtown,” Jackson said. “The first step of redeveloping any urban core begins with education, and this project sends a clear message that we are committed to bettering the community with students who will compete globally.”
Parents interested in enrolling their children can contact the CMSD Student Assignments Office at 216.523.6347, or visit www.csuohio.edu/k-12 for more information.
The International Baccalaureate offers programs of international education to a worldwide community of schools that develop intellectual, personal, emotional and social skills for students to live, learn and work in a rapidly globalizing world. The program serves 800,000 students at 2,800 schools worldwide.
Internationally focused school to serve as a school of choice for Cleveland students and training ground for CSU education students
Today, the Cleveland Metropolitan School District and Cleveland State University announced a collaborative project to launch an on-campus kindergarten-through-12th grade school with a curriculum that is globally recognized for culture, innovation and high standards.
The school, Campus International School, is one of five ‘new and innovative schools’ outlined in the District’s Academic Transformation Plan. Campus International School will incorporate programs from the International Baccalaureate – a Swiss-based, education program renowned for its academic rigor and international curriculum, such as Chinese language classes.
Beginning this fall, the school will accept 120 students in kindergarten, first and second grades with plans to extend classes to the 12th grade by 2015. It will be housed in the First United Methodist Church at the corner of East 30th and Euclid Avenue.
Initially, there will be two classes in each grade consisting of 20 students. The school’s regional draw provides enrollment opportunities for CMSD students, the children of CSU employees and students and students throughout Cuyahoga County. A lottery will determine enrollment if demand exceeds availability.
Campus International School provides yet another educational choice and a university setting for its students. “This school will provide a unique educational experience that is currently unavailable throughout most of the region, and without the burden of tuition,” said Cleveland Schools CEO Dr. Eugene Sanders. “This will set a new urban standard in education, while allowing us to attract some of the best teachers available.”
Campus International School will provide a unique learning environment not just for the school’s young students but also for CSU education students, who will have immediate access to a teaching environment. Similar to a teaching hospital, University students will use the campus school as a hands-on training facility to enhance their classroom experience.
“This is truly a distinctive project on many fronts,” said CSU President Ronald Berkman. “This will provide the city with a unique, high-end education at no additional cost to the parents. But it will also provide the University with a venue to produce new, best-in-class teachers of the future.”
For Cleveland Mayor Frank Jackson, the project is a step toward reversing the flow of urban sprawl and drawing new families back into the city.
“For the City of Cleveland, the school represents a viable new option for younger families who want to live downtown,” Jackson said. “The first step of redeveloping any urban core begins with education, and this project sends a clear message that we are committed to bettering the community with students who will compete globally.”
Parents interested in enrolling their children can contact the CMSD Student Assignments Office at 216.523.6347, or visit www.csuohio.edu/k-12 for more information.
The International Baccalaureate offers programs of international education to a worldwide community of schools that develop intellectual, personal, emotional and social skills for students to live, learn and work in a rapidly globalizing world. The program serves 800,000 students at 2,800 schools worldwide.
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