Recession v. Depression… Where are we now and where are are we headed?

Few economists would dispute that the United States is currently in the throes of a recession. Depending upon your personal economic situation and the industry sector you are evaluating, some experts have implied that we have in fact entered into a depression.

The definition of a depression is `a 2-year period with unemployment at a rate of 10% or above.' An additional description defines a depression as 'a 10% fall per-capita in gross domestic product and consumption.` The jobless rate, as of February, sits at 8.1% and continues to climb. The economy contracted at an annualized rate of 6.2% in the last quarter of 2008 and is forecasted to shrink at an annualized rate of 7% during the first 3 months of 2009. Using these definitions, on a national basis, the United States has not yet entered into a depression.

Individual sectors of industry, however, have already done so; led overall by the housing market decline, which, as the credit crisis intensifies, has continued at an accelerated pace in recent months. During the last 4 years, residential investment has decreased by 37%. This compares with an overall 80% drop in homebuilding spending from the years 1929 through 1932. The auto industry is also classified into this same economic category with little outlook of reversing their current course. We will keep you posted…

$15 Million Sale Leaseback Offer

Penstar secured a letter of intent for the acquisition of a 220,000 square foot Southern California distribution facility, to be leased back to the current owner/user. The property is owned by a company based outside of the United States, whose subsidiary occupies 100% of the facility. Penstar's investment group offered $15 million (100% of the appraised value) subject to a long-term lease to the tenant. The subsidiary will be the lessee with the parent company serving as the lease guarantor on the 15-year lease back. The rental rate will be $1,350,000 during the first year, and will escalate 2$ annually over the life of the lease. The tenant will be granted four 5,year options to control the property for a minimum of 35 years. The tenant will also have the right to sublease the property at any time. To discuss, please contact Steven Hamermesh at (818) 883-9609 or Hamer@PenstarAdvisors.com.

Penstar has identified an insurance company seeking to fund permanent/refinance loans on industrial and office properties located in major metropolitan cities nationwide. The lender has 3, 5, 7, 10, 15 and 20-year money with a maximum amortization of 30 years. All properties must have a minimum 90% occupancy in order to be considered. To discuss, please contact Gerald Price at (818) 883-9629 or Price@PenstarAdvisors.com.

30 Day Libor	10-Year Treasury	Prime
0.56%	2.86%	3.25%

Penstar Realty Advisors can be reached at (818) 883-8600 or at our offices located at:
21700 Oxnard Street, Suite 1870, Woodland Hills, CA 91367