Corrections or additions?
These articles by Peter J. Mladineo were published in U.S. 1
Newspaper on September 16, 1998. All rights reserved.
Real Estate Future
With a bear market threatening Wall Street, some real
estate developers may lose some working capital. But because the
fundamentals are good, the situation probably won’t plunge into a
crisis similar to the early ’90s.
The experts agree on that, but not on much more than that. Sparks
could fly at a panel at the National Association of Industrial and
Office Properties that features five professionals from different
corners of the real estate world on Thursday, September 17, at 5:30
p.m. at the East Brunswick Hilton. Cost: $140. Call 732-417-9010 for
The moderator is Joseph Gyourko, acting director of the Wharton
School’s Zell/Lurie Real Estate Center. The panelists are Michael
Maturo, the CFO of Reckson Associates Realty Corp., a real estate
investment trust (REIT) that owns the University Square buildings
on Campus Drive and is co-developing Northeast Business Park at Exit
7A; Emanuel Stern, president of Hartz Mountain Industries, a
privately owned real estate developer in northern New Jersey; Frank
C. Wuest, director of AEW Capital Management LP, a real estate
advisory firm; and Kevin Riordan, managing director of
mortgage and real estate securities at Teachers Insurance and Annuity
Association, an institutional investor. Call 732-417-9010.
Gyourko reports that the program was originally called a "Forum
on Consolidation and Capital Strategies," but changes in the
markets in the last weeks have prompted a slight alteration of the
subject material. "It’s going to be a little less
than we thought," he says.
"For a while not much is going to happen in terms of
he says, "but in the long run if what we get out of this later
is a recession then you’ll see the strong devouring the weak, and
consolidation will speed up."
Gyourko points to the recent decline in the value of REIT stocks.
(REITs are publicly owned real estate firms such as Mack-Cali,
Boston Properties, and Brandywine Realty, all of which have made
acquisitions in the Princeton area in the last year.) These declining
prices "may have been signals to the fact there may be a
rolling credit problem in the world," he says. "But I’m not
predicting a catastrophe by any means. I don’t think you’re going
to see anything like the early ’90s in real estate."
But Stern of Hartz Mountain says that REIT activity is completely
hamstrung. "On the equity side the REITs are dead in the
he says. "They can’t go and issue equity. The REIT stocks are
down 20, 30, 40, 50 percent, therefore the public doesn’t want to
buy the stock anymore."
Shares in Reckson, for instance, are now trading at roughly $19 per
share, compared to $29 a year ago. Mack-Cali, which owns 400 Alexander
Park, 5 Vaughn Drive, Horizon Center, 103 Carnegie Center, and 3
Way, costs roughly $26 per share, compared to $43 a year ago. Neither
firm responded to repeated phone calls for comment.
These sagging stock prices are creating a double whammy for the REITs,
Stern maintains. "As their stock prices fall their debt ratio
rises without new capital coming in," he says. "If you look
at it, REITs were the dominant acquisition vehicle for properties
in the last three years. In the last four or five months they’ve lost
their capital, so to speak."
In a related story, last week marked groundbreakings of a new spec
building at the Carnegie Center, being constructed by one of those
aforementioned REITs, and of the Commons on Roszel Road (see this
week’s Life in the Fast Lane column, page 56). Charlie Hatfield,
a vice president at SJP Properties, the Parsippany-based developer
of the Roszel Road project, says there’s no reason to fret. The
are still there. "They need space down there like they need
he says. "We have financing from large institutional investors
so we have deep pockets similar to the REITs and these investors are
partners with us and our projects."
— Peter J. Mladineo
If the current "market correction" turns out
to be a long-term plunge, here’s one group that might do even better
than short sellers: Turnaround experts. This special breed of
(whose ranks include Sunbeam’s ousted hackster Al Dunlap) is
called in to rescue companies in dire straits.
Turnaround professionals are growing in number and even have their
own trade group, the Turnaround Management Association, the New Jersey
chapter of which celebrates the turnaround of the year (KIWI
Airlines), on Thursday, September 17, at 5:30 p.m. at the Eagle Rock
Club in Roseland. Call 973-226-1500 for more information.
"It’s an international group devoted to the corporate renewal
process," says Tom Hays, the president of the national TMA
and of Nachman Hays & Associates, a turnaround firm based in Narberth,
Pennsylvania. "The profession is going to continue to grow. We
are going to gain further visibility and we have already achieved
substantial recognition as a viable industry." More than 3,000
members are expected to join the TMA by the end of the year, Hays
Hays, a CPA, started his turnaround practice in 1993 and says that
the field of turnaround professionals is expanding to attorneys,
accountants, banks, and lenders. "We wish to be an all-inclusive
group because what we’ve found over the years is that turnarounds
work better when everybody is involved," says Hays.
But the differences between a turnaround practitioner and a regular
executive can be dramatic. "The typical issue is generally running
out of cash," he says. "Important decisions have to made in
a compressed time frame. The long-term chief executive is primarily
interested in growth while the interim CEO or turnaround manager is
interested in the ability to sustain the corporation’s existence and
lay the groundwork in returning to profitability."
Hays maintains there are three basic elements necessary for a
turnaround. "You need one or more core businesses, you need
bridge financing, and you need adequate human resources to be able
to sustain a business," he says.
A turnaround goes through five stages, a management change stage,
a situational analysis stage, an emergency action stage, a business
restructuring stage, and the return to normal. "What we’re really
looking at is the basic blocking and tackling that any business
says Hays. "The differences are the timeframes are more acute
and the problems are more severe. The skill sets that a turnaround
manager has are different skill sets than taking the business forward
and growing the business, so there’s generally a handoff in the
stage and the return-to-normal stage."
Hays instructs boards to follow these rules and their businesses won’t
end up like Sunbeam (Al Dunlap’s former employer that fired him after
his mega-cuts failed to revive the company’s profits). "What
did not truly figure in business restructuring was the development
of human resources," Hays says. "And essentially he burned
so many bridges that he left a hollow shell within a corporation.
One of the key future resources are your people."
If the economy worsens, the turnaround industry will benefit, but
Hays predicts it will be harder to help companies pull through.
lending institutions’ workout policies are basically driven by the
quality of their balance sheets, so they’ll give less time for a
he says. "When the downturn comes it’s going to be much less
— Peter J. Mladineo
What’s OSHA up to these days? Not much, says Mike
Yarnell, assistant area director of the central New Jersey
Safety and Health Administration office in Avenel. "It’s a quiet
time," he says. "It’s the end of the fiscal year. We’ve got
a lot of people who want an OSHA update."
Yarnell will give an OSHA update on Wednesday, September 23, at noon
at the Middlesex Chamber meeting at the New Brunswick Hyatt. Call
Nancy Ostin at 732-821-1700 for more information.
"There are no new standards," says Yarnell, though "there
are a couple on the horizon." Instead, Yarnell will describe in
intimate detail OSHA’s fresh new outlook as mandated by the federal
"We have identified certain strategic goals," he says.
looking at our enforcement differently." While 70 percent of
work is responsive in nature — answering complaints about unsafe
workplaces or investigating accidents, 30 percent of its job is
pro-active or preventative. That latter portion is getting the
The first thing OSHA will attempt is to try be quicker in response.
"This may be sound like a ridiculous goal but 95 percent of
will be investigated within one working day of notification,"
Complaints, which comprise 55 percent of its workload, will be
to within one day for an investigation (by letter), or five days,
for an on-site inspection. Currently, the standard time for an on-site
inspection is 30 days, Yarnell reports. "To be honest I’ve had
some that have gone four to five months, so we have a little work
to do on this. The average time (for an inspection) is a month. They
want it down to five days. That’s an optimistic goal."
OSHA will also be focusing its attention on what it considers are
the worst safety and health problems in the workplace — silica
exposure, lead, and amputations. "Those things are things that
we want to reduce," he says.
Certain high-hazard industries, such as shipyards, food processing,
nursing homes, and construction, will also be under OSHA’s microscope.
"As a sidelight of construction we are going to be looking at
the four major reasons for fatalities: falls, `struck by,’
and `crushed by,’" says Yarnell. Watch your step.
<B>Sandy L. Ewell knows what it’s like to be singled
out for being black. The former CEO of the Trenton YWCA, Ewell spent
much of career on various nonprofit boards in central New Jersey.
But she remembers one conference where she was the only African
and was tapped on the shoulder by a white woman who informed her that
there was no toilet paper in the bathroom.
When Ewell blithely shrugged off the woman’s assumptions, she came
back at Ewell again, this time imperiously demanding that she take
care of the toilet paper deficiency. As this altercation became the
center of attention and jaws dropped, the woman realized her
and quickly slipped away.
In hindsight, what hurt Ewell most about the situation was that the
offending woman was more interested in saving face than in repairing
hurt feelings. "I probably would not have felt the hurt if she
had said, `I’m so sorry, can we talk?’ or something," says Ewell.
"She just split."
Ewell, who is now a diversity trainer, uses this story to make her
point that communication is the key to respecting diversity in the
workplace. "There is absolutely a difference between folks’ total
separatism and unintentional racism, classism, or homophobia,"
she says. "Sometimes it is just that we have a tendency to react
to situations that we’re not familiar with in a very negative way.
We put out negative vibes because of fear, because of not
what the difference is all about. We don’t know how to approach
In January Ewell started a new business, the Common Ground Institute
LLC, out of her home in Bordentown. The group, which organizes
programs for management, holds a two-day seminar on Tuesday and
September 22 and 23, at 8:30 a.m. at the University Inn and Conference
Center at Rutgers in New Brunswick. Call 609-291-9730 for more
"The major thrust in the conference and work we do is to get folks
to understand the role that communication plays when you’re dealing
across racial, cultural, gender, age, class, or sexual orientation
lines," Ewell says. "We have found that this has been the
drawback to people having to work together. We don’t know how to talk
to one another."
The program is being co-sponsored by Avanta, the Virginia Satir
an international training group named after the noted family therapist
that ascribes family of origin theories to issues of racism. "A
lot of this is passed on," says Ewell.
Here are some pointers Ewell has for any workplace where diversity
could cause a problem:
to listen — to everybody," says Ewell.
key is to believe what people tell you," says Ewell. "I think
that the anger and the rage that you hear about, it comes out because
that people don’t believe that this really happens. `Oh I didn’t mean
it therefore it should be all right’. You need to stay, you need to
talk about it, and you need to go after a resolution. You need to
show that it really matters."
a buzzword these days, and isn’t enough. "Embracing really means
respecting and respecting means willingness to learn about them,"
she says. "You have to go after information instead of assuming.
We rarely have the opportunity to talk to people across cultural
We work with people who are different from us every single day, but
do we really take the time to know about who they are? Do we know
when we are insulting someone?"
in West Virginia, graduating in 1972, long before the school was
by a Japanese college and changed its name to Salem Teikeyo
En route to a graduate degree, she started working for the Trenton
YWCA, where she stayed for the next 25 years. She also sat on the
boards of McCarter Theater and the Princeton Area Foundation and
commissions in Trenton.
Not helping the racism problem is the degree of religious separatism
in the United States, Ewell notes. "Sunday is probably the most
separate day of the entire week," she says. "Usually you don’t
find churches where you find different groups of people. We have a
long way to go here."
— Peter J. Mladineo
Sexual harassment has become a staple of the television
news. Now New Jersey Citizen Action, a consumer watchdog organization,
is sponsoring a public forum on sexual harassment, where women can
have access to attorneys, counselors, and labor leaders, on Thursday,
September 24, from 7 to 9 p.m. at the East Brunswick Public Library.
The event is free; call the hotline at 877-666-6625 for more
The Mercer Chamber hosts a business forum, "Sexual Harassment:
Defining & Enforcing Rules in the Workplace," with Allison
Accurso, a partner with Fox Rothschild, Don Addison, division
chief of economic development and affirmative action for Mercer
and Judy Olsen, assistant vice president of human resources
or Trenton Savings Bank. The forum is Wednesday, September 23, at
8 a.m. at the Palmer Inn. Call 609-393-4143.
Those who were disappointed when June’s electric
conference at the New Jersey Retail Merchants Association and the
New Jersey Food Council was canceled will want to attend a legislative
affairs luncheon on utility deregulation sponsored by the Princeton
Chamber on Tuesday, September 22, at noon. Cost: $10 for the deli
lunch. Call 609-520-1776.
One of the major issues being debated is whether the utilities should
have to pick up the "stranded costs" — the overhead of
the energy infrastructure. "It’s a good argument if you believe
they made those investments," says John Wisniewski, the
state senator who was a scheduled speaker at the canceled conference.
"I think there’s got to be an apportionment of it. You can’t look
at residential ratepayers as being the source of allowing utilities
to recover the cost of stranded costs.
"The industry has enjoyed an above average rate of return on its
investment, that certainly has to be considered. And commercial users
need to share part of that cost. Overall, commercial users would
far more than the resident on energy deregulation. It’s not just
and equipment, it’s people. The people are also stranded and have
to be added into that calculation."
One group of people particularly eager to see deregulation implemented
are retirement home seniors. In July the Energy Committee from
joined the Coalition for Competitive Energy. The group represents
3,200 seniors living in planned retirement homes — all of whom
live in electrically heated houses and are struggling to afford high
In a press release, the CCE held that the Clearbrook seniors were
not happy with a pilot program sponsored by GPU Energy that resulted
in a five percent reduction. The committee also sides with Wisniewski
on the stranded costs issue. "We no longer want to pay for
costs," says Ted Frankel, the committee’s co-president.
It doesn’t matter just how you drive, it matters also
how good you are with your insurance company. The first of new auto
reform measures are scheduled to take effect this fall, with the
of a three-tier rating system that ranks drivers in three categories,
according to their driving record, their accidents, and how promptly
they pay their premiums. (Yes, that’s right, this latter point is
a major determinant of how much you will pay.)
experienced drivers, have been customers of the current insurance
company for at least three years, and have a history of paying
have up to six motor vehicle points but no at-fault accidents.
to lapse for nonpayment, have had at-fault accidents, are
drivers, have more than six motor vehicle points or have had numerous
pay the most. These new tier rates go into effect within 60 days for
new policies and 90 days for renewals. Drivers who renew their
after November 1, will have surcharges replaced by their company’s
The mandated 15-percent rate reduction will go into effect in
More information can be obtained by contacting Professional Insurance
Agents New Jersey, a trade association representing insurance agents.
PIANJ has published a four-page booklet for insurance agents and
to share with their insureds. Call 800-424-4244.
Corrections or additions?
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— the web site for U.S. 1 Newspaper in Princeton, New Jersey.