From coast to coast

From coast to coast, developers are nixing or delaying condominium projects as home sales decelerate, construction costs soar and lenders start to balk at financing units that might not sell. What's making it worse is the glut of high-priced condos and too few people who can afford them.

"We've gone through the biggest real estate boom in the last eight or nine years and some of these projects haven't started yet. Do you think they're going to start building now?" said real estate executive Allan Domb, dubbed Philadelphia's "condo king."

In Las Vegas, projects nixed include high-profile developments such as Aqua Blue, a $600 million, 825-unit luxury condominium-hotel resort that counted Michael Jordan as an investor; the $3 billion, 4,400-unit Las Ramblas resort, backed by George Clooney; and Ivana Las Vegas, a $700 million, 945-unit tower named after Donald Trump's ex-wife.

Related Las Vegas, one of the two developers for Las Ramblas, had cited rising construction costs and slowing sales for the cancellation.

In South Florida, canceled condo developments include 1390 Brickell Bay and ICE in Miami, Fort Lauderdale's The Waves Las Olas, and Promenade in Palm Beach County. WCI Communities Inc., a luxury home builder based in Bonita Springs, Fla., said in June that new orders for its high-rise condominiums fell by 84 percent in the second quarter. The company will now go forward with only three to five condo projects in 2006, down from as many as 15 to 17, mostly in Florida.

With housing looking increasingly anemic, it's not surprising that developers are bailing out.

Domb said he's gotten about half a dozen phone calls over the past four weeks from developers asking if he would like to buy their properties.

In May, the volume of apartment-to-condo conversions plunged to $334 million from $1.65 billion a year ago, said Gleb Nechayev, senior economist at Torto Wheaton Research, a real estate research firm in Boston owned by CB Richard Ellis. The all-time high was $4 billion, hit last September.

Builder confidence, as measured by the National Association of Home Builders/Wells Fargo Housing Market Index, fell in June to its lowest level since April 1995. Confidence took a hit due to rising mortgage rates, high home prices and investors and speculators fleeing the market.

The index surveyed builders of single-family homes, where the sales decline hasn't been as severe as for condos.

Jack McCabe, chief executive of McCabe Research and Consulting in Deerfield Beach, Fla., said desperate developers with finished condos are offering plenty of incentives in South Florida.

Freebies range from one year's free mortgage to the use of a yacht or upgraded kitchen packages. McCabe thinks some developers might even sell units at cost if condo sales continue to weaken.

McCabe considers the condo market, especially the luxury end, at risk of a crash. Over the next few years, he sees prices falling by double-digit percentages.

The luxury condo surplus is to blame. McCabe said about 25,000 condos are under construction in Miami-Dade County, with two-thirds costing $700,000 or higher; another 25,000 units have gotten building permits and 50,000 have been announced for future construction.

McCabe said the median household income in the county qualifies local buyers for a $225,000 home, so the luxury units are targeted mainly toward affluent, out-of-state buyers.

Meanwhile, speculators have driven up prices by flipping units, he said. But they're now leaving the market — driving down demand — and putting up for sale properties they own, adding to the glut.

Aside from Miami, he said areas at risk include Boston, San Diego, Las Vegas, Seattle, Chicago, Orlando, Fla., Washington, D.C., and Manhattan.

A big part of the problem is that many condo projects are priced high, in part because developers have to recoup the high prices they paid for land. But most buyers can't afford it.

"The sweet spot of the market is probably $250,000 to $700,000," Domb said. "That's what the majority of the population can afford. Many condos are priced higher. That's part of the problem."

Tell that to The Donald. Real estate mogul Donald Trump told The Associated Press he's going ahead with his 45-story waterfront luxury high rise called Trump Tower Philadelphia.

"It's doing fine," Trump said. "It's been intense. So many people want to move there."

He added interest has been high for the project, which he said doesn't surprise him because his name sells.

ensure the company has the flexibility to meet the challenges of intensifying competition

The Dolan family, which controls Cablevision Systems Corp. (CVC.N), on Monday said it offered to buy the remaining shares it does not already own in a deal that values the company at $7.9 billion, sending its shares up almost 12 percent.

Shareholders would receive $27 per share in cash, under the terms of the deal proposed in a Sunday letter to the board of directors, according to a statement issued by the family, which said it was not aiming to sell Cablevision.

The deal, which follows a thwarted effort by the Dolans to buy out the company last year, implies an enterprise value of $19.2 billion, which includes debt for Cablevision.

In the letter to the board the Dolans said they believed that going private would "ensure the company has the flexibility to meet the challenges of intensifying competition and the risk of new entrants in years to come."

Cable operators face increasing competition from telephone companies such as Verizon Communications (VZ.N) and AT&T Inc (T.N), which develop rival video services for consumers.

In 2005 the Dolans offered $33.50 per share in a deal that valued Cablevision's cable assets at $21 a share and proposed a $12.50 per share spin-off of the company's other assets such as the Madison Square Garden sports arena, a spokesman said.

The latest offer price represents a 17 percent premium to the average closing price over the past two weeks and is 14.9 percent higher than a 2005 proposal to go private when adjusted for a $10 dividend paid in April, according to the statement.

Cablevision shares rose 11.8 percent in early trade to $26.75 from their Friday close of $23.93 on the New York Stock Exchange.

The family said the latest offer, a simpler structure than the 2005 offer, took into account feedback it received from the special committee that reviewed the earlier proposal.

It said it anticipates that the board will form a special committee of directors to respond to this proposal and that it would not pursue the deal without special committee approval.

The Dolans said they expect the cable company's senior management team to stay in place with Charles Dolan as chairman and James Dolan as president and chief executive.

They said they expect to continue to run the business substantially in accordance with current practices and keep its employee base, "with changes as necessary to meet competitive challenges."

The family said it would finance the deal in part by investing all its shares in the company, which would have a value of about $1.7 billion based on the offer price.

The total funds needed for the deal are expected to be about $10.9 billion, including refinancing of existing credit facilities, according to the Dolan family, which said it received a commitment letter from Merrill Lynch & Co and Bear Stearns & Co. for debt financing necessary for the deal.

Merrill and Bear Stearns also acted as financial advisors to the Dolans. Law firms Debevoise & Plimpton LLP and Skadden, Arps, Slate, Meagher & Flom LLP were its legal advisors.

may be enough to discourage

The market was awaiting a possible formal decision on Monday by OPEC states about its output policy. Over the weekend, reports quoted OPEC officials as saying the 11-member cartel would reduce its output by about 4 percent to stem a 24 percent decline in prices since mid-July.

Oil prices have been range-bound in the past week as traders weighed tough rhetoric from some OPEC members calling for output cuts against that of Saudi Arabia, a representative of whom has denied there was a deal to reduce production.

Still, recent posturing "may be enough to discourage aggressive near-term selling," noted Mike Fitzpatrick at Fimat USA.

Light, sweet crude for November delivery rose 64 cents to US$60.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract on Friday dropped 27 cents to settle at US$59.76 a barrel.

Heating oil futures gained 1.35 cents to US$1.7075 a gallon (3.8 liters) while gasoline prices added 1.03 cents to US$1.5145 a gallon. Natural gas futures rose 14.8 cents to US$6.575 per 1,000 cubic feet.

Reports have said a majority of OPEC states back a voluntary reduction, and the deal could be ratified as early as mid-December at a meeting in the Nigerian capital of Abuja. Some agencies reported the cartel would decide by Monday whether to cut its production.

The reports came about a week after OPEC members Nigeria and Venezuela voluntarily began reducing their oil production by a combined 170,000 barrels per day. Official figures released in August put total OPEC production at just under 30 million barrels a day.

Analysts said the longer-term view is that the Organization of Petroleum Exporting Countries would likely act before the end of the year to trim its output as global inventories rise and economic growth slows.

Meanwhile, the current rise in oil prices was not only because of concern about a possible decline in supply amid robust demand, but also a reflection of a strong global economy, analysts said.

"The market's been toying for a while with whether OPEC will or will not cut production," said Joseph Capurso, an analyst with Commonwealth Bank of Australia in Sydney. "But whether or not it happens, the world economy is strong, so that will put a floor under prices _ there isn't a concern that U.S. oil consumption is going to fall into a hole.

Final Vista candidate was releases

MICROSOFT has released the final test version of its upcoming Windows operating system and said the launch for the highly-anticipated upgrade is running on schedule.

Incorporating feedback from earlier test releases, the world's largest software maker said it distributed Windows Vista Release Candidate 2, or RC2, for its testers to try.

"Microsoft expects the RC2 build to be the last interim release before the product is released to manufacturing," the company said.

Earlier this week, Goldman Sachs analyst Rick Sherlund said Microsoft was likely to ship Vista on time and distribute RC2 this week or next week, indicating that the Windows upgrade would be available for business customers in November and retail PCs by late January.

Microsoft said it continued to target that schedule for Vista, but said the final delivery date will depend on the product's quality.

Windows Vista, already five years in the making, has been postponed by Microsoft several times and some industry analysts have speculated that the world's largest software maker will again be forced to push back its release dates.

Microsoft Windows sits on more than 90 percent of the world's personal computers and the Windows business accounts for about 30 percent of the company's $44 billion in revenue.

Vista spyware

Posted by blogadmin in Business News Blogs

Mocrosoft's so-called Software Protection Program (SPP) has been presented to intending users as a fait accompli just a month ahead of Vista's scheduled release. It will mean that those who use Vista and other Microsoft products will have to put up with their systems constantly being checked online to make sure they're not using any products deemed to be pirated software.

I say deemed to be pirated software because as sure as night follows day there will be many cases in which the SPP will make mistakes and label legitimately acquired software as pirated.

In such cases, users will have to convince Microsoft that they bought their software legitimately and, if they don't succeed, they will have to hand over extra money or their system will be disabled.

In some cases, users who have activated a legitimate copy of Vista may need to do a number of reinstalls because they have suffered a hardware failure or their system isn't running well. Hopefully, Microsoft will be able to differentiate between that and users installing a single copy of Vista on multiple computers.

Perhaps we should be grateful to Microsoft for letting its intentions be known in advance of the Vista release. It gives us a chance to evaluate the alternatives.