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TUESDAY, OCTOBER 26, 2010 EDITOR: JANE WOOLDRIDGE jwooldridge@MiamiHerald.com 305-376-3629

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REAL ESTATE

Market bright spot: condos in Dade ■ Miami-Dade condominium sales were up significantly in September compared to last year, but single-family home sales and prices were down throughout South Florida. BY TOLUSE OLORUNNIPA tolorunnipa@MiamiHerald.com

As South Florida’s shaky real estate market searches for recovery, an investor group’s $1 billion bet on the local condominium market is about to be put to the

test. Starwood Capital-led investor group ST Residential — in charge of more than 1,200 new condo units in South Florida — launched its ST Miami initiative this month, announcing plans to

release hundreds of new condo units into South Florida’s fragile market in the coming months. Condo sales were the standout figure in the September existing sales report released Monday by the Miami Association of Realtors. Existing condo sales in Miami-Dade County rose 36 percent in September compared to

the same month last year, with 833 sales closed. Month over month, sales were down 2.8 percent, despite a 5 percent decline in median prices. In Broward County, condo sales slid to 828, down 4 percent from September of last year. Existing single-family home sales continued their descent in September, falling 6 percent year

over year in Miami-Dade, with 582 sales. In Broward, year-overyear single family sales dropped 16 percent to 673. Nationally, the housing market improved in September, with existing sales increasing 10 percent from August. Prices are still falling in many •

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FORECLOSURES

Banks continue to cancel hearings ■ Although banks said they are resuming foreclosure actions, they still are calling off court hearings. BY DAVID McLAUGHLIN Bloomberg News

RIGHTING THE SHIP SETTING SAIL Several cruise lines are expecting new ships between 2011 and 2014: AIDA............................. 3 Carnival........................2 Celebrity...................... 2 Costa............................ 2 Disney.......................... 2 MSC................................1 Norwegian.................. 2 Oceania........................ 2 Princess....................... 2 Seabourn...................... 1 Star Clippers................1 Source: Carnival Corporation, CruiseCritic.com

NORWEGIAN CRUISE LINE

CRUISES

Banks are still canceling foreclosure hearings and sales in Florida, the state with the thirdhighest foreclosure rate behind Nevada and Arizona, after Bank of America said it was resuming efforts to seize homes. Banks had called off about one-third of their foreclosurejudgment hearings, and more than half of their auctions at two Florida courthouses as of Monday morning, according to court records and personnel. Court administrators said the rules mean that foreclosures would not resume in earnest for at least a month. Bank of America and Detroitbased GMAC Mortgage said they were moving to complete pending foreclosures following complaints that home seizures nationwide were based on faulty documentation. Attorneys general in all 50 states, as well as federal agencies including the U.S. Department of Justice, are investigating. GMAC said it is reviewing foreclosure cases that potentially have defective affidavits in the 23 states, including Florida, that use judicial proceedings for foreclosures. In Miami-Dade County, banks canceled 100 out of 182 foreclosure auctions scheduled for Monday, said County Clerk Harvey Ruvin. In Palm Beach County, banks had canceled 139 out of 213 foreclosure auctions scheduled for Monday, according to court records. Broward County does not hold sales on Mondays. Citigroup, Deutsche Bank, JPMorgan Chase and Bank of America were among those listed as canceling the sales. In Dade City, 30 miles northeast of Tampa, banks as of Monday had canceled 22 out of 75 hearings set for Tuesday and Thursday at which they were scheduled to seek court approval of home foreclosures. Bank of America, the largest U.S. bank by assets, said Oct. 18 that it would start resubmitting foreclosure affidavits this week in 102,000 pending cases in which a judgment is pending.

■ Months after introducing the Epic, Norwegian Cruise Line on Monday announced orders for two new 4,000-passenger vessels, signaling improvement in the industry. BY HANNAH SAMPSON hsampson@MiamiHerald.com

In the latest sign that the recession-rocked cruise industry is staying afloat, Norwegian Cruise Line on Monday announced plans to add two new 4,000-passenger ships to its fleet, due for delivery in April 2013 and 2014. The latest orders, combined with a handful of new ships announced earlier this year by Carnival for two of its brands, signal a departure from the lull

in activity of the last couple of years. Still, any uptick is likely to be gradual, said UBS cruise analyst Robin Farley. ‘‘We anticipate a slower pace of ship orders overall in the industry, as most cruise operators are still constrained by balance sheet and/or a more disciplined approach over the next few years,’’ she wrote in a report Monday. In an interview, NCL chief executive Kevin Sheehan said he

too expects a few years of slow growth for the industry. ‘‘Most people believe as you get into 2013, things will really start to move in the right direction, so I think that timing works well for us,’’ he said. Norwegian — which said it has committed financing in place from a syndicate of banks — ordered the new ships for 1.2 billion euros total, or about $1.68 billion at the current exchange •

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ECONOMY

Consumers toting economy toward recovery ■ Economists now expect the most robust consumer spending of the recovery in the quarter to come. BY SHOBHANA CHANDRA AND COTTEN TIMBERLAKE Bloomberg News

WASHINGTON — American shoppers are set to become the economy’s new source of strength. Economists lifted estimates for consumer purchases in the third quarter after retail sales climbed more than forecast in September and the government said gains in the prior two months were larger than previ-

ously reported. Predictions of a 3 percent or more increase by RBS Securities and 2.6 percent by Morgan Stanley would mean the most robust household spending of the recovery. ‘‘Consumers are taking the baton as a driver of the expansion,’’ said Dean Maki, chief U.S. economist at Barclays Capital in New York. ‘‘While it is still a moderate recovery, the speed is going to be stronger than many people think.’’

Even with unemployment stalled near 10 percent, Americans are ready to play a bigger role in the rebound because their incomes are improving and they have been paying off debt and rebuilding wealth, said Dean Maki, chief U.S. economist at Barclays Capital in New York. Investors are already betting that consumer spending, which accounts for about 70 percent of the economy, will be healthier in the next few months than some economists are predicting. The Standard & Poor’s 500 Retailing Index is up 14 percent

this year, and the Consumer Discretionary Select Sector SPDR Fund has risen 17 percent compared with a 6.1 percent gain in the broader S&P gauge. ‘‘The markets can smell a recovery is coming,’’ said James Paulsen, chief investment strategist in Minneapolis for Wells Capital Management, which manages $342 billion. Macy’s may jump 22 percent in the next 12 months, according to the latest average analysts’ target-share price. Nordstrom may rise 18 percent, Kohl’s 16.5 percent and Target 16 percent.

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THE MIAMI HERALD

THE BUSINESS REPORT | BUSINESS STARTS ON PAGE 8B >>> FLORIDA BRIEFS PUBLIC COMPANIES

Office Depot chief resigns as of Nov. 1 Office Depot Inc.’s Chairman and CEO Steve Odland is stepping down by mutual agreement with the board, effective Nov. 1. Odland’s resignation comes after last week’s disclosure that the company agreed to pay more than $1 million in penalties to settle a U.S. Securities and Exchange Commission investigation. The SEC charged that Office Depot improperly shared information with selected analysts and major investors in 2007. Odland, who has been CEO since 2005, and former Chief Financial Officer Patricia McKay agreed to settle the charges against them, without admitting or denying the findings, for $50,000 each. Neil Austrian, lead director and former NFL president, will step in as interim chairman and CEO. Odland will act as a consultant to the company through Dec. 31, Office Depot said. Office Depot also announced preliminary third-quarter earnings of $54 million, or 18 cents a share, on sales of $2.9 billion. The quarterly results would compare with a loss of $413 million, or $1.51 a share, on sales of $3 billion for the same quarter in 2009. — SUN-SENTINEL • Miami’s ATM fees among highest: Miami banks and thrifts charge the fourth highest ATM fees ($2.56) and second highest bounced check fees ($32.84) in the nation, according to Bankrate.com’s 2010 Checking Study, released Monday. Checking account fees rose to a record high nationwide, the study found. ATM fees jumped 5 percent from 2009 to $2.33, on average. The fee banks charge for using an out-of-network ATM increased almost 7 percent to an average of $1.41, and overdraft fees rose 3 percent to an average of $30.47. Bankrate.com surveyed one interest checking account and one noninterest checking account at the five largest banks and the five largest thrifts in 25 large U.S. markets. • NCL settles with justice: Miami-based Norwegian Cruise Line and the Justice Department have reached an agreement in a lawsuit filed on behalf of cruise passengers who were deaf or hard of hearing or used wheelchairs on NCL cruises in Hawaii. Under the agreement, NCL will ensure such passengers have full access to activities on board or during shore excursions. NCL will also pay $100,000 in damages to nine people with disabilities as well as $40,000 in civil penalties to the United States. • Watsco announces earnings: Coconut-Grove based Watsco Inc. reported earnings per share increased 47 percent to 97 cents per diluted share for the quarter ending Sept. 30. Operating income increased 54 percent to a record $64 million during the same period. Net income improved 49 percent to $31 million. For the year to date, operating income more than doubled to a record $144 million with an operating margin of 6.6 percent. The company distributes air-conditioning, heating and refrigeration equipment. • DJ Irie, Levinson join forces: Fort Lauderdale-based Levinson Jewelers has partnered with celebrity spinner DJ Irie, who will design a signature line of jewelry called Peace thru Music. • Tribune modifies bankruptcy plan: Publisher Tribune Co. — owner of The Sun Sentinel in Fort Lauderdale and The Sentinel in Orlando — filed a modified Chapter 11 plan that would allow senior lenders, owed $8.6 billion, to recover about 71 percent through cash plus all new stock. Other unsecured creditors of the parent Tribune would receive 35.2 percent cash or an initial 32.7 percent plus the ability to participate in litigation recoveries.

NATIONAL/INTERNATIONAL MARKET REPORT

Stocks up after G20 pledge Stocks rose Monday, sending the S&P 500 Index to a fourth straight gain, after the Group of 20 nations pledged to avoid ‘‘competitive devaluation’’ of currencies and investors bet the Federal Reserve will announce further bond purchases next week. The S&P 500 advanced to 1,185.62, climbing above its highest close since May 3. The Dow Jones Industrial Average rose 31.49 points to 11,164.05. ‘‘Global central banks have set a floor under the market, and the risk of a double-dip recession is almost nonexistent at this point,’’ said Oliver Pursche, co-manager of the GMG Defensive Beta Fund. ‘‘Traders are not going to fight the Fed after it has come out and said it will support the market — they’re going to buy.’’ • Higher mileage for trucks, buses: The Obama administration announced new rules Monday to reduce greenhouse gas and other pollutants by requiring greater fuel efficiency for big trucks, buses and other heavy-duty vehicles, starting with new models in 2014. The regulations, the first of their kind involving heavy vehicles, would require increasing fuel efficiency to an average of about 8 miles per gallon, compared with about 6 miles per gallon now. • AIG chief has cancer: American International Group said late Monday that Chief Executive Robert Benmosche has been diagnosed with cancer and is undergoing ‘‘aggressive’’ chemotherapy. Benmosche has overseen the reorganization of AIG for more than a year. In recent months, the company has taken several steps toward repaying more than $100 billion it owes the U.S. government from a bailout in 2008. ‘‘I feel fine, and I continue to work according to my normal schedule,’’ Benmosche said in a statement. — HERALD STAFF AND WIRE REPORTS

CRUISES

Is cruise ship market shaping up? •

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rate. Sheehan said the company’s performance, improving economy and favorable pricing from the shipyard made it the right time for the orders. ‘‘Now that we’ve done all the hard labor and pushing and reinventing and rationalizing and engineering that needed to be done, we’re now at the point where the business is ready for new growth,’’ he said. Industry watchers view the ship orders as a move toward attracting equity investors. Though it is a privately held partnership between Genting Hong Kong and two private equity firms, the company will release its third-quarter earnings report on Tuesday. Though similar in size, the new ships will feature a sleeker shape than the $1.2 billion, 4,100-passen-

ger Epic, which entered service earlier this year. The Epic’s boxy exterior has been the subject of some derision, deemed bulbous by some and even downright ugly by others. ‘‘We did modify the look and feel of the ship to a more traditional ship,’’ Sheehan said. Good thing, said Stewart Chiron, a Miami cruise expert and CEO of Cruiseguy.com, noting the Epic’s exterior and controversial bathroom design. ‘‘The ship has its issues,’’ he said. He said he expected NCL to ‘‘greatly improve the looks and the flow and the design’’ with the new ships. What won’t change is the cruise line’s emphasis on ‘‘freestyle’’ cruising, offering multiple dining and entertainment options. For the new ships, the company is returning to German shipyard Meyer

Werft GmbH after a rocky experience with the yard that built the Epic, STX Europe in France. The company’s announcement potentially signals an end to a recent lull in new cruise ship ordering. Although several cruise lines are launching major new ships — including Royal Caribbean’s Allure of the Seas and Seabourn’s Sojourn, both coming to Fort Lauderdale in November, and the new Celebrity Eclipse, coming to Miami this fall — orders for several years out have slowed from previous years, when many lines introduced a new ship every 12 months. Carnival’s German line, AIDA Cruises, recently signed an order with Meyer Weft for a 2,192passenger vessel to enter service in 2013. Earlier in the year, Carnival also ordered two new ships for

its Princess Cruises brand to be delivered in 2013 and 2014. In an earnings call last month, Carnival Chairman and CEO Micky Arison said he had no plans to rush into any more orders at the moment. ‘‘I don’t expect us to be doing anything between now and the beginning of the year,’’ he said. ‘‘But who knows?’’ Carolyn Spencer Brown, editor of CruiseCritic.com, said the time is right for new orders — because timing was wrong over the last couple of years. ‘‘I think everybody’s going to be ordering. They have to, because they all stopped ordering,’’ she said. ‘‘The way that that market works is that cruise lines have to be fresh and new and have something to promote, something that’s different.’’

TRAVEL

ASSOCIATED PRESS

BEDBUG ANXIETY: Tourists afraid of getting bitten are canceling holiday plans to visit New York City.

BUGS BITING INTO BIG APPLE ■ Guests are cancelling plans to visit New York City, but officials say sightings of critters are rare. BY SARA KUGLER FRAZIER Associated Press

NEW YORK — New York City’s bedbugs have climbed out of bed and marched into landmarks like the Empire State Building, Bloomingdale’s and Lincoln Center, causing fresh anxiety among tourists who are canceling vacations planned for the height of the holiday season. Some travelers who had arranged trips to New York say they are worried about staying in hotels and visiting attractions as new reports of bedbugs seem to pop up every few days. And officials in Mayor Michael Bloomberg’s administration are concerned about the effect on the city’s image and $30 billion tourism industry. The discoveries of pests at high-profile places are often not full-blown infestations, or even in public areas. Bloomingdale’s

reported finding exactly one bug in the famous department store, the Empire State Building had them in the basement and Lincoln Center’s were in a dressing room. But those reports, along with bedbug discoveries in movie theaters, hotels and clothing chain stores, are causing skittish travelers to call off trips planned months ago. Industry professionals — who have privately told city officials that they are nervous about bedbugs hurting New York’s reputation — say publicly that they are not aware of any bedbug-related cancellations. But several would-be tourists say they are aborting their trips here because they fear the bloodsucking pests. ‘‘It sounds like you can get them anywhere, any time of day and not know it until you get home,’’ said Patty Majerik, from Baltimore. ‘‘I’ve got four people traveling on a train, in cabs, going to stores and theaters, and they could be in any of these places? I

hate to say it, but I doubt we’re going to come this time,’’ Majerik said. Suzanne Baldwin said she is forfeiting money spent on reservations for a November trip to New York City from her home in Florida. She had already grown accustomed to checking hotel rooms for bedbugs — and has done so in New York before — but she is now overwhelmed at the idea that the bugs have spread beyond hotels. ‘‘We thought long and hard about this trip,’’ she told the AP in an e-mail. ‘‘However, we decided, knowing we would lose quite a bit of money from nonrefundable tickets, it was not worth the worry.’’ Bloomberg said he was concerned about the effect of bedbug hysteria on the city’s reputation. ‘‘You don’t want anything that would dissuade people from coming here,’’ he told reporters. ‘‘Hopefully these things come and go, and this will go quickly.’’ Bed bugs are definitely on travelers’ minds —

including in South Florida’s hotel market. Type ‘‘bed bugs’’ and ‘‘Miami’’ or ‘‘Fort Lauderdale’’ into the popular travel review site tripadvisor.com, and angry reviews pour out of guests claiming bed-bug bites at hotels throughout the region. But whether fueled by media coverage or actual infestations, tourism bureaus in Broward and Miami-Dade said Monday they had not heard of any cancellations due to bed bugs. Sightings of the rustcolored bugs, which are about the size of an apple seed, have surged in recent years. It is not known what caused their sudden spread, but experts have theorized that an increase in global travel and the banning of certain pesticides may be partly responsible. Bedbugs are famously difficult to eradicate; they hide in many more places than beds and can go for a year without feeding. Miami Herald staff writer Douglas Hanks contributed to this report.

REAL ESTATE

Market bright spot: condos in Miami-Dade •

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sectors of the housing market, but ST Residential CEO Wade Hundley said brand new condos have avoided that fate this year, even posting increases. ‘‘Relative to all the other markets in the U.S., Miami is doing well,’’ Hundley said. ‘‘We’ve seen prices increase about 10 to 15 percent since the beginning of the year.’’ ST Residential became a major player in South Florida’s real estate market about a year ago when it bought a stake in the distressed real estate portfolio of failed Chicago-based Corus Bank. In a publicprivate deal with the Federal Deposit Insurance Corporation, ST Residen-

tial bought into a portfolio of condo projects that includes Paramount Bay in Miami, Jade Ocean Condominiums in Sunny Isles Beach and Tao in Sunrise. The purchase made ST the second-largest owner of developer units in Miami’s downtown condo market, behind Jorge Perez’s Related Group, and the public-private deal gave the investor group the flexibility to adjust pricing levels. ST Residential is ‘‘coming in at a time when prices have stabilized, and they’re creeping upwards, in that Brickell-downtown area,’’ said David Dabby, a real estate analyst with Dabby Group Advisors. ‘‘The market is weak overall, but there’s enough

acquisition activity to begin moving that [developer] inventory.’’ Dabby noted however, that prices are still 50 percent below where they were four years ago, and not likely to make significant gains anytime soon, since discounted foreclosures and short sales rule the market. Distressed properties are responsible for more than half of existing home sales in South Florida, dragging down median prices. In September, yearover-year housing prices fell nearly across the board, with Broward single-family homes standing out as the sole exception. The median priced home in Broward sold for

$214,200, up 7 percent compared to last September. Broward condo prices were down 9 percent to $71,600. In Miami-Dade, condo prices fell 25 percent to $99,400, and single-family home prices fell 2 percent to $188,000. ST Residential plans to relaunch 530-unit Mint on the Miami River into the market in December and will kickstart sales at the 346-unit Paramount Bay on Biscayne Bay north of the Performing Arts Center next year, pricing units ‘‘at market’’ rates, Hundley said. ‘‘We control so much inventory that if we come in at very low price point we could disrupt the market,’’ he said. ‘‘And we don’t want to do that.’’

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Market bright spot: condos in Dade  

Miami-Dade condominium sales were up significantly in September compared to last year, but single-family home sales and prices were down thr...

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