FINANCE

TD Bank Survey: CFOs plan to increase capital expenditures in 2012

BY Marianne Wilson

Cherry Hill, N.J. — Middle market CFOs, buoyed by increasing optimism fueled by sales growth, are prepared to increase capital expenditures by dipping into their stockpile of cash reserves, according to a survey by TD Bank. The top three areas of expected capital deployment include technology (40%), improvements to existing facilities (17%), construction of new facilities (12%),

According to the survey, three-quarters of financial decision-makers at mid-sized companies say they expect sales to increase over the next 12 months despite lingering economic headwinds, with half (51%) expecting to increase their capital expenditures in 2012, up from 39% last year.

"Middle market companies, much like their larger brethren, have hoarded cash since late 2008, with the expectation that worse days were ahead," said Walter Owens, head of specialty and corporate banking at TD Bank. Now with interest rates at record lows and the Fed promising to stay the course through 2012 into 2013, the negative headwinds are abating and companies are making strategic capital investments so that they emerge stronger."

Despite persisting economic headaches across the globe, about two-thirds of financial executives said their company’s sales increased over the past 12 months (66%), including 29% who saw increases of 10% or more. Looking ahead to the next 12 months:

  • Seventy five percent expect sales to increase;
  • Twenty seven percent expect an increase of 10% or more; and
  • Nine percent expect a decrease in sales.

As companies steeled for a double-dip recession that never materialized, 54.5% of executives said they stockpiled at least a modest amount of cash to mitigate any risk of a downturn. Now about half are ready to put some of that capital to work.

Aside from the overall economic climate, cash flow, margins and revenue are expected to be the biggest impediments to making capital investments over the next 12 months (43%), followed by the political climate, regulation and government policy (25%), sufficient funding (11%), expenses (6%) and having enough trained staff (6%).

As a hedge against a possible continued lull in the economy, businesses are most likely to reduce expenses (34%), followed by investing in new business lines (14%), freezing hiring (10%), freezing wages (9%), paying down debt (8%) and increasing liquidity or cash reserves (7%). Only 5% are most likely to use layoffs as a hedge against continued economy problems.

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REAL ESTATE

Retail rents fall 1.6% year over year, with national average at $14.65

BY Marianne Wilson

Chicago — Retail rents fell 1.6% year over year, and inched down 0.5% since the last quarter to the current national average of $14.65, according to Jones Lang LaSalle’s North America Year-end Retail Outlook. National retail vacancy levels posted a 0.1% quarter-over-quarter drop from 7.1% to 7.0%, with open-air centers at the high end with 10.9% vacancy, and general retail at the low end with 4.7% vacancy.

New York and San Francisco continue to be the healthiest markets, with vacancy levels of 2.1% and 3.0%, respectively, the study found. Atlanta and Dallas show the largest vacancies at 10.2% and 9.1%, respectively.

Among the markets tracked, Chicago continues to report the highest absorption, with an impressive 2.0 million sq. ft. in third quarter 2011. Boston and Houston were not far behind with 1.98 and 1.75 million sq. ft, respectively. Only Atlanta showed negative net absorption this quarter with -352,909 sq. ft., though San Francisco’s poor absorption continued into this quarter with only 19,942 sq. ft. absorbed due to store closings and relocations.

In other study highlights:

  • Rents fell 1.6% year over year and inching down 0.5% since the last quarter to the current national average of $14.65.
  • Investment sales volume of significant retail properties totaled $8.2 billion in third quarter 2011, down sharply from the second quarter, when data was inflated by the $9.2 billion Blackstone/Centro transaction.
  • All of the 18 regional markets that Jones Lang LaSalle tracks are currently tenant favorable and are likely to remain that way through at least the first half of 2012. Houston is the only market that is showing a significant rise in rental rates.

In the distressed market, total retail properties now stand at $28.7 billion, signaling that the sector is now 50% t worked out of its distress pool. Interestingly, distress made up a noticeably lower proportion of total sales this quarter at just 6% but workouts have cut almost $3.5 billion from the distress pool. Restructurings accounted for a significant portion of this, totaling $4.0 billion in the third quarter. New inflows to distress were also much lower this quarter, adding only $1.4 billion. Markets with the heaviest distress include Phoenix, Las Vegas and Chicago.

There continues to be wide geographic disparity in retail property sales, with the southeast region in the lead with $6.67 billion year to date. The West was second with $5.51 billion in transactions, followed by the Midwest ($5.25b), Mid-Atlantic ($4.25b), Northeast ($4.23b) and Southwest ($3.72b).

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News

Sam’s Club, Salvation Army help deserving families with fifth annual campaign

BY CSA STAFF

BENTONVILLE, Ark. — Sam’s Club announced that it is teaming up with The Salvation Army and Off the Field professional football players’ wives association for the fifth annual Dream Drive for the Salvation Army. Twenty pre-selected families from the Salvation Army Adopt-A-Family program in 10 different cities will receive $1,000 worth of gifts, including food, clothes, personal items and toys from Sam’s Club. As part of the Dream Drive campaign, Off the Field representatives will be shopping at their local Sam’s Clubs on Dec. 8 to purchase items for these families.

"Giving back to our local communities has been a long-standing part of our culture at Sam’s Club," said Cindy O’Connor, home and spparel VP for Sam’s Club. "Our partnership with The Salvation Army and Off the Field allows us to help make the holidays a little brighter for families in need through the annual Dream Drive campaign."

Sam’s Club will donate $200,000 through the Dream Drive program this holiday season to provide gifts and personal items for 200 Salvation Army families in the following cities:

  • Baltimore

  • Charlotte, N.C.

  • Chicago

  • Dallas

  • Houston

  • Indianapolis

  • Kansas City, Mo.

  • Philadelphia

  • Phoenix

  • Washington, D.C.

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