Companies Play Spin the Balance Sheet
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20090629-A--0001-MAIN-CCI-CN_-- 6/26/2009 6:04 PM Page 1 INSIDE SPECIAL DOUBLE ISSUE TOP STORIES TRANSPORTATION TRADE TRADE TRADE Jobless TRADE teens moan summertime ® blues TOURISM ENTERTAINMENT TOURISM ENTERTAINMENT TOURISM ENTERTAINMENT DEMOGRAPHICS PAGE 3 DEMOGRAPHICS DEMOGRAPHICS VOL. XXV, NOS. 26, 27 WWW.CRAINSNEWYORK.COM JUNE 29-JULY 12, 2009 PRICE: $3.00 DEMOGRAPHICS Top 10 PROFESSIONAL SERVICES PROFESSIONAL SERVICES PROFESSIONAL SERVICES reasons why CITY & STATE BUDGET CITY & STATE BUDGET New York City SMALL BUSINESS MEDIA SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS SMALL BUSINESS MEDIA SMALL BUSINESS TECHNOLOGY MEDIA TECHNOLOGY should secede TECHNOLOGY MEDIA TECHNOLOGY TECHNOLOGY MEDIA TECHNOLOGY REAL ESTATE REAL ESTATE from NY state REAL ESTATE ECONOMY REAL ESTATE Coney Island keeper REAL ESTATE ECONOMY REAL ESTATE REAL ESTATE ECONOMY REAL ESTATE THE INSIDER, PAGE 3 REAL ESTATE REAL ESTATE REAL ESTATE ECONOMY REAL ESTATE REAL ESTATE ECONOMY REAL ESTATE Thor Equities’ Joe Sitt gives city a ride for its money REAL ESTATE REAL ESTATE Media feast REAL ESTATE ECONOMY REAL ESTATE REAL ESTATE ECONOMY REAL ESTATE on King of Pop’s EMPLOYMENT BANKING EMPLOYMENT BY AMANDA FUNG EMPLOYMENT BANKING EMPLOYMENT EMPLOYMENT BANKING EMPLOYMENT untimely end EMPLOYMENT BANKING EMPLOYMENT giving a reporter the tour of a half dozen of his Trouble is, many people simply don’t believe him. EMPLOYMENT BANKING EMPLOYMENT NEW YORK, NEW YORK, P. 4 EMPLOYMENT BANKING EMPLOYMENT Manhattan properties, Joseph Sitt stops in front of each, In 2000, Mr. Sitt sold his successful women’s apparel EMPLOYMENT RETAIL EMPLOYMENT reeling off details on everything from their architecture chain, Ashley Stewart, and announced plans to focus on EMPLOYMENT RETAIL EMPLOYMENT EMPLOYMENT RETAIL EMPLOYMENT A sweetheart deal to the history of their leases. But when it comes to his developing retail and mixed-used properties in dis- EMPLOYMENT EMPLOYMENT HEALTH CARE RETAIL HEALTH CARE for Atlantic Yards most controversial project, Mr. Sitt gets choked up. tressed urban areas. He envisioned himself in the mold HEALTH CARE RETAIL HEALTH CARE HEALTH CARE RETAIL HEALTH CARE “It’s my passion to make Coney Island better,”says the of the comic-book hero he named his firm after. Today, HEALTH CARE POLITICS HEALTH CARE development? suddenly teary-eyed chief executive of Thor Equities.“It his record is mixed at best.Critics,which include city of- EDUCATION POLITICS EDUCATION EDUCATION POLITICS EDUCATION So what. is the place where I played hooky and grew up. I want to ficials, insist that he’s just another speculator looking for EDUCATION POLITICS EDUCATION give back to the neighborhood and to New York City.” See CONEY ISLANDon Page 5 EDUCATION POLITICS EDUCATION EDITORIAL, PAGE 6 2009 City Facts A GUIDE TO VITAL STATISTICS ON THE NYC MARKETPLACE Get to know New York City by the numbers. Our annual edition offers more than 100 easy-to-read charts on the trends shaping business in the city this recession year. BUSINESS LIVES Pages 7-41 ON THE WEB GOTHAM GIGS ➚➚ Eugene Kuziw is ready INTERACTIVE CITY: Midtown for Lady Liberty crowds and downtown skyscrapers, PAGE 45 with details on tenants and rents. Plus, slide shows, maps G ANNE FISHER offers and charts in searchable form. advice on motivating WWW.CRAINSNEWYORK.COM/ employees PAGE 45 CITYFACTS G WHAT’S harperfred SHE’S READING Barbara Corcoran Companies play Spin the Balance Sheet learns Twitter twicks PAGE 46 nore its cost of painting garbage turned things around, the satellite The pressure’s on to prettify ugly earnings trucks. Regulators cracked down, radio operation highlighted in its G GAEL GREENE by ignoring details like, um, biz expenses but with tough times back, so too first-quarter earnings release near- prefers pasta are the numbers games. ly $110 million in what it creative- at seafood- cast ugly results in the best possible “You’re seeing a lot of sugarcoat- ly called “pro forma adjusted in- rich BY AARON ELSTEIN light.A growing number of compa- ing,” says Ted Christensen, an ac- come from operations.” Marea nies are asking investors to focus on counting professor “I never heard of that one be- PAGE 46 the economy is a mess, and prof- pro forma or adjusted earnings and at Brigham Young fore,” Mr. Christensen says. its are under extreme pressure.Now overlook ordinary business expens- University. “There $200M Sirius’ sweetened numbers ex- comes the furious corporate spin to es ranging from payroll costs to in- seems to be more OPERATING clude about $200 million in operat- COSTS excluded terest payments on debt and even of it than ever.” by Sirius XM ing costs, including $72 million in 26 rent for office space. One company Radio in its 1Q interest expense, $51 million in de- 5 Investors have seen this before. on a sugar high is earnings report preciation and amortization and During the 2001-02 recession, Sirius XM Radio, $22 million in “share-based pay- struggling companies sometimes which has piled up $10 billion of ment expense.” Sirius officials de- acted as if certain costs didn’t exist net losses over the past decade, in- clined to comment for this story, ELECTRONIC EDITION when tallying up earnings, perhaps cluding a $62 million net loss last pointing instead to language in most notably when Waste Man- quarter. Eager to show that Chief their earnings announcement that NEWSPAPER See SPINNING on Page 2 71486 01068 agement urged shareholders to ig- Executive Mel Karmazin at last has 0 20090629-A--0002-MAIN-CCI-CN_-- 6/26/2009 6:49 PM Page 1 WAITING GAME: Sales at Capital.“But we have made traction.” IN BRIEF Manhattan House began O’Connor Capital is no stranger 19 months ago, but so far only 77 units have to ambitious projects.During the late THE LOCAL JEWELRY INDUSTRY lost some of its been sold. 1990s, it revitalized Parkchester, a shine last week after diamond district Bronx complex with 12,000 apart- wholesaler Henry Dunay Designs Inc. and ments. Founded in 1983, O’Connor Madison Avenue retailer David Webb Precious has also developed more than 10 mil- Jewels filed for Chapter 11 bankruptcy lion square feet of mall space. protection. Each listed liabilities of between At Manhattan House, however, $1 million and $10 million; Henry Dunay cited tenants weren’t O’Connor’s only prob- assets in the same range, while David Webb lem. In 2006, O’Connor and develop- reported assets of between $10 million and er N. Richard Kalikow bought Man- $50 million. Both companies plan to restructure. hattan House for $623 million from New York Life Insurance Co.but soon CHEER UP, MANHATTAN condo and co-op fell to squabbling. O’Connor finally owners with apartments on the block. About took sole ownership two years ago with 62% of 315 resales this year have fetched higher the help of a $750 million loan. prices than what owners paid for the units In the three years it has taken to between 2005 and 2007, according to a Landmark conversion get Manhattan House to this happy PropertyShark.com tracking of transactions. On point, however, the market has dete- average, the units were resold for a 10% profit. riorated dramatically. Sales at the on track, but sales lag complex officially began nearly 19 BOBBY VAN’S STEAKHOUSE plans a national months ago. Since then, only 77 airport expansion after opening its first airport didik frank units have been sold,with another 13 eatery in John F. Kennedy International Airport in contract, according to public in May. Managing partner Vincent Alessi says Manhattan House at last gets its act together records. the company is considering new spots in Following the September finan- airports in Boston, Chicago, Los Angeles, easy for the owner of the 575-unit 1950s-era cial meltdown of Lehman Brothers and Miami and Washington. Bobby Van’s Grill at BY AMANDA FUNG complex that Grace Kelly once called home others, sales stopped dead. Even worse, JFK is less expensive (a $25 average check per and Jackie Robinson’s widow still does. several buyers who had signed contracts person) than the steakhouse ($75). earlier this month, nearly 150 tenants “We essentially negotiated a treaty,” began maneuvering to get out of them. sipped cocktails and nibbled on hors d’oeu- says Brian Fallon, a partner at O’Connor O’Connor Capital declined to confirm BANK ROBBERIES IN THE CITY surged 57% last vres in Manhattan House’s newly renovat- Capital. sales activity. year, and on Monday a City Council committee ed 10,000-square-foot rooftop club. Both Over the course of a year,he spent hours Determined to press ahead in the crucial will review a proposed law requiring bank the upgrade and the sustenance came cour- at the East 66th Street complex listening spring selling season,in February O’Connor branches to install bullet-resistant “bandit tesy of O’Connor Capital Partners, the de- to tenants’ concerns and issues. In the end, Capital tapped Corcoran Sunshine Mar- barriers.” Police Department officials say the veloper that has been battling to convert the compromises were struck, agreements keting Group to take over sales efforts from measure will deter holdups, which rose to 444 in landmark Upper East Side apartment were inked, and O’Connor Capital sweet- Prudential Douglas Elliman. To help that 2008. But some bank industry officials, fearful complex into luxury condominiums. ened the pot by throwing in a rent-free effort, the landlord also slashed apartment of the barriers’ impact on their interactions with “They are being more accommodat- month for all participating tenants. prices by 20%, according to Mr. O’Connor. customers, say there’s no evidence the barriers ing,” says Kathy St. John, a member of the “The older residents were frightened “We have been very busy,” says Anne prevent robberies—and there is evidence they Manhattan House Tenants Group.