Small Business Optimism Slides

In another sign of the fragility of the nation's economic recovery, results of a recent survey revealed small business optimism slumped in July amid worries over economic prospects. The National Federation of Independent Business said its small business optimism index declined in July by 0.9 point, or 1%, to a reading of 88.1. The group called the persistence of the sub-90 readings as “unprecedented in survey history.” NFIB went on to say that 90% of the decline in the monthly index can be chalked up to deterioration in the outlook for business conditions in the forthcoming 6 months.

Of the components that comprise the index, expectations for the economy to improve slid by nine points to -15%. Other components also fell, including plans to make capital outlays, plans to increase inventories, and the expected tightening of credit conditions.

The NFIB also stated that the frequency of reported capital outlays over the past 6 months slid by one point to 45%, just one point above the 35-year record low reported in December 2009. Of those surveyed, 73% said that the current period is not a good time to expand; 66% of those respondents cited the weak economy, compared with 18% who cited the political climate. The NFIB also weighed in on the inflation/deflation debate, stating that inflation “is clearly not a problem” as more companies continue to cut prices as opposed to increase them. We will keep you posted…

$7,500,000 Refinance for a Southern California Retail Center

Late last week, Penstar closed the cash-out refinance of a special-use retail center located in Southern California. The borrower repositioned the center 13 years ago with the addition of a special-use fitness anchor who occupies 60% of the gross rentable square footage. The center has maintained 100% occupancy since reconstruction was completed over a decade ago.

Although the anchor has survived corporate bankruptcy and has 3 years remaining on their lease, the lender took comfort in the anchor's below market rents as well as the overall historical occupancy and cash flow of this asset. Specific store sales were not available. No TI or lease reserves are required by the lender. The borrower elected a 15-year fixed rate term (amortized over 25 years) to minimize future refinance risk. For more information, please contact David Stepanchak at DStep@PenstarAdvisors.com.

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Helpful Humor

“The Devil and the Agent” The Devil tells a Hollywood agent, “Listen, I can make you richer, more famous, and more successful than any agent alive.” “In fact,” he continues, “I can make you the greatest agent that ever lived.” The agent considers this for a moment and then asks, “What do I have to do in return?” Smiling broadly, the Devil quickly replies, “Well, of course you have to give me your soul,” he says, “but you also have to give me the souls of your children, the souls of your children's children and, as a matter of fact, you have to give me the souls of all your descendants throughout eternity.” “Wait a minute,” the agent says cautiously, “What's the catch?”

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Interest Rates as of 08/26/10

30 Day Libor	10-Year Treasury	Prime
0.26%	2.51%	3.25%

Penstar Realty Advisors can be reached at (818) 883-9609.