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A Modest Proposal

David Auchterlonie, chairman and chief executive officer of The Scotland Group, Inc., a turnaround management firm, has proposed restoring the former Resolution Trust Corporation to relieve small and mid-size businesses of oppressive bank debt without any cost to taxpayers.

Auchterlonie said the new RTC would enable banks to resume making loans to these businesses that can generate job growth and restore a healthy economy.

Auchterlonie said Congress should create a new version of the RTC that would end banks’ practices of extending and amending business debt, which have led to permanent debt service payments on company books and negated potential investment in expansion and hiring in the workplace. He proposes funding the reconstituted RTC solely by proceeds from the sales or work-out of toxic notes provided by the banks.

“No tax dollars would be required,” Auchterlonie said.

Under his plan, banks would take permanent and toxic business loans off their books and turn them over to the RTC at par value. The private sector would evaluate the value of the assets, which the RTC could sell individually or in pools. Auchterlonie notes that there is a market for these assets in the form of un-invested capital in private equity, insurance companies and hedge funds. Estimates of this so-called “dry powder” run as high as $1.5 trillion.

Auchterlonie said that removing the loans from the banks would free them to make new loans to the 5.9 million small and mid-sized businesses whose growth is critical for a revitalized economy.

 

Chapman Bids for Crystal Cathedral

Lawyers for Chapman University have asked a bankruptcy judge to consider a $46-million deal for the school to buy
the Crystal Cathedral’s property in Garden Grove, with an option for the church to buy half of the land back.

The Chapman bid is competing with one from Greenlaw Partners, a Newport Beach real estate developer that intends to build homes on the property.

Pimco Hires Chief for Muni Team

PIMCO, a leading global investment management firm, has hired Joe Deane as an Executive Vice President and head of the Municipal Bond Portfolio Management team. Julie Callahan will join the firm as a Senior Vice President and Municipal Bond Portfolio Manager. They will be based in the firm’s New York City office beginning on July 18th and will report to Curtis Mewbourne, a Managing Director and Head of the firm’s New York Portfolio Management Group.

Meanwhile …

Pimco., seeking to raise $600 million for a fund that would invest in residential mortgages, agreed to slash its management fee should the fund suffer losses, Bloomberg reported.

Pimco REIT Inc., which filed for an initial public offering in April, disclosed last week that its annual management fee would decline to 1.0 percent from 1.5 percent if the fund loses money over a one-year period.

Several large investment firms are creating real estate investment trusts, or REITs, that could help provide home loans if government-sponsored enterprises Fannie Mae and Freddie Mac curtail financing. The rush to seize this opportunity is creating a glut of mortgage REITs, forcing some to make concessions to attract capital from institutions.

DEV Opens US Unit in Newport

DEV Systemtechnik, Germany, announced the formation of a U.S. subsidiary, DEV America, based in Newport Beach. DEV America will support growing customer requirements for the company’s leading-edge products that help satellite and cable television systems transmit, receive, switch, and distribute signals over coaxial and fiber optic cable.

Fletcher Jones Juggles Inland Empire Projects

Fletcher Jones officials have requested another extension on plans for building a Mercedes dealership in Temecula, but a similar project in Ontario is under way, the Press-Enterprise reported.

The Ontario plans call for a showroom, offices and a service center covering more than 80,000 square feet that would employ an estimated 60 to 70 people. Grading has been done and construction is ready to begin. The dealership is expected to open in April 2012.

At the same time, Fletcher Jones officials have requested another one-year extension on a similar Temecula project.

The Temecula City Council approved plans in 2008 for an 80,000-square-foot Mercedes dealership but the project was put on hold when the recession hit. Developers are eligible to extend the project for up to five years.

Anaheim Hills Office Plaza: Acquired by Realm Group for $13 million.

Realm Group Buys Anaheim Hills Office Plaza

Realm Group, LLC of Newport Beach, CA has paid $13 million for Anaheim Hills Office Plaza, a 75,000-sf office building located at 160 North Riverview Drive in Anaheim, CA. Developed in 2008, the building is visibly situated along the 91 Freeway and surrounded by Anaheim Hills and Yorba Linda.

Anaheim Hills Office Plaza is 100 percent occupied with local and national tenants such as Raytheon, Premier Business Centers, Century 21 and Gateway One Lending and Finance.

Victory Energy Completes Texas Well

Victory Energy Corp., through its partnership with Aurora Energy Partners, announced the successful completion of its Tunis Creek Oil and Gas Prospect in Pecos County, Texas. The University “6” #1 Tunis Creek well was completed in the Ellenburger formation.

Very preliminary testing of the Ellenburger formation indicates that oil reserves could exceed earlier estimates. Storage tanks are scheduled to be installed this week with oil sales to market occurring shortly thereafter. Associated natural gas testing has not yet occurred. A natural gas delivery pipeline is nearby.

Based on the positive results of this first well and the previously identified multiple oil and gas pay zones above this producing formation, the company will immediately begin evaluating locations for a second well on the acreage. Several additional development wells may be drilled if production warrants, officials said.

Shore House Café Goes Chapter 11

The Shore House Cafe, a 30-year-old Balboa Peninsula icon, filed for bankruptcy in June, public records show, but is still open for business, the Daily Pilot reported.

Stephen Madoni, a Newport Beach attorney representing Shore House, called the move a “reorganization,” but did not offer further comment.

Newport Birch Plaza Sold

Wisco America Co. LTD acquired 20062 Birch St. in Newport Beach, CA from IT Construction LLC for $3.975 million, or about $340 per square foot.

The office building totals 11,684 square feet and was built in 2006. It is a two-story, high image building with covered reserved parking and is known as Newport Birch Plaza.

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