THE WATCH LIST NEWSLETTER 1

A WEEKLY COLUMN FOCUSING ON CHANGING MARKET CONDITIONS, COMMERCIAL REAL ESTATE, MORTGAGES AND CORPORATIONS PUBLISHED BY COSTAR NEWS

IN THIS WEEK'S ISSUE:

CalPERS: Time To Ditch Value Add, REITs, Some Internat'l Holdings ............................................................................................. 1 Commercial Lending Bounces Back In 2010 ..................................................................................................................................... 4 Aussie REIT, U.S. Hedge Fund Continue Battle Over $1.83 Bil. in U.S. Office Properties ............................................................... 6 Facebook Friends Oracle in Sale/Leaseback of New HQs ................................................................................................................ 7 Hines Antarctica JV Left in the Cold as Calif. Cancels Portfolio Sale ................................................................................................ 8 CoStar to Sell DC Headquarters Bldg. for $101M After Buying it for $41M ....................................................................................... 8 Google Teams Up with Aegon on Low-Income Housing Fund ........................................................................................................ 10 Florida's Largest Developer Considering Strategic Alternatives ...................................................................................................... 11 Ultimate Electronics Opts To Go Out of Business ........................................................................................................................... 11 Abercrombie & Fitch To Close 56 Stores ........................................................................................................................................ 12 BJ's Considering Sale of the Whole Company ................................................................................................................................ 12 TA Travel Centers Cuts Deal for Reduced Rents ............................................................................................................................ 13 First Credit Union Closure of 2011 Among Latest Lender Failures ................................................................................................. 13 $9 Bil. Citizens Republic's Ratings Lowered to Junk-Level Status .................................................................................................. 14 BankAtlantic Selling 19 Tampa Branches........................................................................................................................................ 15 Real Money: Note & Loan Purchases ............................................................................................................................................. 15 Atlas Copco Closing Three Facilities in Move to Houston ............................................................................................................... 16 Irvine Sensors Letting Go 19% of Staff............................................................................................................................................ 17 RealNetworks Downsizing By 10% ................................................................................................................................................. 17 Cooper-Standard Plant in Bowling Green Getting Hosed ................................................................................................................ 17 Symmetricom Streamlining in Santa Rosa ...................................................................................................................................... 17 Courier Considering Cutting One-Color Factory .............................................................................................................................. 18 Watch List: Newly Specially Serviced Loans ................................................................................................................................... 19

CalPERS: Time To Ditch Value Add, REITs, Some Internat'l Holdings A New Strategic Plan Would Refocus Portfolio on Core Properties in the U.S.

The nation's largest pension fund, the California Public Employees Retirement Fund (CalPERS), is close to deciding it's time to reduce its exposure in value-add and international properties, get out of REITs altogether and instead focus on core properties in the U.S. CalPERS Investment Committee is meeting Valentine's Day to consider recommendations for a new strategic real estate investment plan that would, among other things, have it:

Investing more in private real estate equity,

Focusing the majority of its portfolio in the U.S.,

Splitting its program into two portfolios,

Requiring a minimum of 75% of the overall portfolio to be Core, and

Replacing its existing benchmark based in part on REIT returns with one based in part on a NCREIF Fund Index benchmark that specifically covers core funds and the effects of their cash balances and leverage on fund performance.

Given the changing role of real estate in the CalPERS portfolio, staff and its consultant Pension Consulting Alliance (PCA) are proposing the revised plan. CalPERS currently holds more than $15 billion in real estate investments. The plan emphasizes private equity over public funds, a strategy that would see CalPERS getting out of public holdings including REITs over the next three years. REITs currently represent 7% of its portfolio.

MARK HESCHMEYER, EDITOR WWW.COSTAR.COM FEBRUARY 10, 2011

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CalPERS' current plan targets 50% international investments. Under the new plan, it would limit its exposure in Western Europe and Japan, keep a small percentage in international growth markets such as Brazil and increase its U.S. holdings. Under the new plan, CalPERS would split its real estate holdings into two portfolios. A legacy portfolio would hold all of its assets that do not fit within the new role of real estate and presumably would dwindle in size over time. A new portfolio would be established comprised of assets which fit the new strategy. The new portfolio would be broken down into three sub portfolios (base, domestic tactical and, international tactical). The base portfolio would be expected to produce predictable cash flows; the domestic tactical would be an extension of its core program with focus on total return; and the international tactical portfolio would be expected to generate appreciation by capitalizing on growth. Under the new plan, CalPERS hopes to reduce its overall risk profile by requiring a minimum of 75% of the portfolio to be Core In documents being presented to CalPERS investment committee next week, Pension Consulting Alliance Inc. (PCA) said believes a focus on domestic core properties achieves the new role of the real estate asset class and reduces risk, as measured by volatility, in the overall portfolio. In addition, the proposed strategic plan also incorporates lessons learned from the previous downturn where CalPERS suffered substantial losses in the value of its real estate portfolio. As previously described by the fund and PCA, the losses suffered in real estate were primarily driven by vintage-year concentration and an investment focus on non-core assets with high amounts of leverage. "While PCA believes that the real estate asset class is likely to remain cyclical and CalPERS will, therefore, experience other periods of poor relative performance, PCA believes that with proper oversight and active risk management, a moderately levered core-oriented portfolio will better insulate CalPERS from such severe losses in the future," PCA wrote. Based on the current make up of the real estate portfolio, the overwhelming majority of CalPERS' new investment dollars will, need to be focused on core properties. As such, the real estate portfolio will be in a period of transition for the next three to five years until it is aligned with the new goals, PCA said. Wilshire Consultants, another CalPERS real estate consultant, also generally agreed with the new strategic plan. It said, it would reposition the portfolio to exhibit more stable, income producing characteristics and would reduce the portfolio's historical reliance on leverage to drive returns. Wilshire did note though, that it has some concerns about the elimination of the REIT portfolio. "While REITs are represented in the global equity program and would not be totally eliminated from the total fund, removing any REIT allocation from the real estate portfolio forces every other asset class to be the "bank" for the liquidity needs of the real estate program," Wilshire wrote. "Under normal circumstances, buying or selling equity or fixed income securities when real estate is managing capital calls is unlikely to be a significant issue. However, as was the case during 2008, there could be times when the real estate portfolio's liquidity needs places stress on other asset classes – thus, the total fund." "Some of this concern would be mitigated by the transition to a greater focus on cash flow generation and stability," Wilshire added. "However, if REITs are eliminated from the real estate portfolio, CalPERS' need for accurate cash flow forecasts from all asset classes is increased. REITs also act as a means for staff to reduce asset allocation underweights for the real estate asset class. If [real estate] is 3% below target, for example, REITs can be employed to bring the asset allocation back in line far quicker than might be accomplished using direct investments."

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Commercial Lending Bounces Back In 2010 By: Randyl Drummer

Powered by improving conditions in the real estate and capital markets, CRE loan originations rose by 36% in 2010 over the previous year, according to preliminary data released at this week's Mortgage Bankers Association (MBA) real estate finance convention in San Diego. In a separate report, the MBA also found that loan maturities continue to roll at a manageable level, with just 11% of the $1.4 trillion in outstanding commercial debt expected to mature this year, shrinking to 9% in 2012. "All the fundamentals are ripe for a very positive, solid comeback, especially in the multifamily sector," Faron Thompson, who attended the conference as the newest addition to Jones Lang LaSalle's real estate investment finance team, tells CoStar. Mortgage bankers originated $110 billion of commercial and multifamily mortgages during 2010, with a strong fourth quarter powering an increase of 36% from 2009, according to preliminary estimates based on the MBA Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released at the conference this week. The results show that loan production by life insurance companies sprang back to life in 2010. Life companies were the leading source of lending, with origination volumes 155% higher than 2009 levels. Government-sponsored enterprises Fannie Mae, Freddie Mac and FHA/Ginnie Mae also saw strong volumes, with increases for FHA/Ginnie Mae offsetting declines in production for Fannie Mae/Freddie Mac. Total originations for commercial mortgage-based securities (CMBS) conduits increased more than 10-fold in 2010 while originations for commercial banks saw a year-over-year decline. Originations jumped 63% in the fourth quarter over the previous three months and 88% over fourth-quarter 2009, pushing totals above 2009 levels, said Jamie Woodwell, MBA’s vice president of commercial real estate research. The late rally was driven by increases in originations for office properties, which rose 170% over the same period a year earlier; and hotels, which rose 169%. Loans for industrial properties, retail and multifamily rose 98%, 94% and 81%, respectively. Health-care lending was flat at 4%. Origination volumes typically grow over the course of the year and changes between the third and fourth quarters are likely driven at least in part by seasonal factors. However, among investor types, CMBS saw an increase in loan volume of 298% compared to the third quarter, by far the largest quarterly jump. The next-largest increase, originations of commercial bank portfolios, rose a more seasonal 102%. The stirring of the CMBS market after a three-year slumber reflects the improving picture for commercial real estate fundamentals. In addition to the 10-fold increase for all of 2010, CMBS conduits rose 60-fold increase compared to last year’s fourth quarter. Life companies' volume rose 170% in the fourth quarter over a year ago. "Life companies and FHA led the increase in dollar volumes, but a large percentage increase in originations for CMBS is likely the most symbolic change from last year," Woodwell said. The MBA's Commercial/Multifamily Mortgage Bankers Originations Index, which averages 100 on a quarterly basis since 2001, started first-quarter 2010 at 45 and rose to 114 in the fourth quarter. That's the highest since third-quarter 2008's 116 and roughly parallel to 2002-2003 levels, according to an MBA chart. Compared to the third quarter, fourth-quarter originations for hotel properties saw a 333% increase while health care properties ended the year strongly with a 204% increase.

LOAN MATURITIES HOLD STEADY

Only 11% or $155 billion of the $1.4 trillion balance of outstanding commercial/multifamily mortgages held by non-bank investors through Dec. 31, 2010, will mature in 2011, and 9%, $125 billion, will come due in 2012, according to the Mortgage Bankers Association’s 2010 survey of loan maturity volumes. The survey found that maturities vary considerably by the type of investor holding the loan.

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"The long-term nature of commercial real estate means that relatively fewer -- not more -- commercial and multifamily mortgages have been maturing during the throes of the credit crunch and recession compared to other credit types," said Woodwell. "For most investor groups, commercial mortgage maturities are relatively spread out, with some increases starting in 2015 as the loans originated in 2005, 2006 and 2007 come due." MBA’s 2010 survey collected information directly from servicers on the maturity years of more than $1.4 trillion in outstanding non-bank commercial/multifamily mortgages. Only small shares of the commercial and multifamily mortgage debt held by life insurance companies, Fannie Mae, Freddie Mac or FHA, or in fixed-rate CMBS will come due in 2011 or 2012. Greater shares of mortgages held in short-term and floating-rate CMBS and by credit companies, warehouse facilities and other investors will mature in 2011 and 2012. According to the survey, $155 billion, or 11%, of the total $1.4 trillion balance of outstanding mortgages held by non-bank investors, will mature in 2011 followed by $125 billion, or 9%, in 2012. The maturities vary significantly by investor group. Just 3% of the outstanding balance of multifamily mortgages held or guaranteed by Fannie Mae, Freddie Mac, FHA and Ginnie Mae will mature in 2011. Life insurance companies will see 7% mature in 2011. Among loans held in CMBS, 12% will come due in 2011, including 8% the $521 billion of loans in fixed-rate conduit CMBS and 22% of the $190 billion of loans in floating rate and large-borrower CMBS. On the high end of the spectrum, 30% of commercial mortgages held by credit companies and other investors will mature in 2011.

WELLS FARGO, PNC LEAD CRE MORTGAGE SERVICERS

Wells Fargo led the MBA's year-end ranking of commercial and multifamily mortgage servicers with $451.1 billion in U.S. master and primary servicing, followed by PNC Real Estate/Midland Loan Services with $337.4 billion, Berkadia Commercial Mortgage with $194.9 billion,

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Bank of America Merrill Lynch with $126.6 billion, and KeyBank Real Estate Capital with $118.9 billion. Wells Fargo, PNC/Midland, Berkadia, Bank of America Merrill Lynch and KeyBank are the largest master and primary servicers of commercial/multifamily loans in U.S. CMBS, CDO and other ABS; PNC/Midland, GEMSA Loan Services, Prudential Asset Resources, Northwestern Mutual, and Northmarq Capital are the largest servicers for life companies; PNC/Midland, Wells Fargo, Berkadia, Deutsche Bank Commercial Real Estate and Prudential Asset Resources are the largest Fannie Mae/Freddie Mac servicers. PNC/Midland ranks as the top master and primary servicer of commercial bank and savings institution loans; GEMSA the top credit company, pension funds, REITs, and investment funds servicer; PNC/Midland the top FHA and Ginnie Mae servicer; Wells Fargo the top for mortgages in warehouse facilities; and Berkadia the top for other investor type loans.

Aussie REIT, U.S. Hedge Fund Continue Battle Over

$1.83 Bil. in U.S. Office Properties Faced with vocal shareholder opposition, Charter Hall Office REIT, a Sydney, Australia-based REIT has further explained its strategy to sell up to a half-interest in its U.S. office portfolio valued at a total of more than $1.83 billion. Charter Hall Office REIT owns 14 office properties in the U.S. with about 7.69 million square feet of rentable square feet. Five of the properties are in Southern California, with other properties in Denver, Indianapolis, Atlanta, Orlando, Tampa, Boston, Northern New Jersey, Wilmington, DE, and Washington, DC. The REIT said this week it was exploring with Australian and global parties the sell down of up to a 50% interest in the U.S. portfolio based upon the Dec. 31, 2010, book values. "We continue to consider a number of alternatives in addition to the initiative with a view to reducing the U.S. exposure. Also, Charter Hall Office Management has received a number of indicative, non-binding and highly conditional approaches in relation to the acquisition of Charter Hall Office's U.S. assets," the company wrote to unitholders. Charter Hall Office said was assessing other "credible alternatives," but that the preferred strategy remains to pursue the sell down of up to 50% of the U.S. portfolio at book value with a view to retaining a reduced exposure to the recovering U.S. office markets. The REIT said a divestment of up to a 50% interest is expected to benefit all unitholders because:

Charter Hall Office's weighting to Australian assets will be increased as proceeds increase the net equity exposure in Australia;

Charter Hall Office's ongoing capital expenditure and gearing related to the more highly leveraged U.S. portfolio will be significantly reduced;

Charter Hall Office would retain exposure to the potential recovery in U.S. office markets post implementation of the initiative and would retain flexibility to pursue further divestments in the future; and

It highlights the realizable value of its U.S. assets. Charter Hall Office said it could use the sale proceeds to buyback shares, reduce debt and acquire more Australian properties. The plan, however, still isn't sitting well with Orange Capital LLC, a New York City hedge fund that holds a little more than 5% of Charter Hall Office's stock - making it the REIT's largest independent shareholder. Orange Capital said it intends to convene an extraordinary general meeting of Charter Hall Office unitholders to discuss resolutions, directives, or amendments requiring a mandatory vote on the proposed joint venture, or a replacement of Charter Hall Office Management as the responsible entity, and/or an orderly wind-down of Charter Hall Office with proceeds payable to unitholders.

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Orange Capital, with assistance from its financial advisor, Houlihan Lokey, has identified a number of potential strategic alternatives for the U.S. assets that Orange Capital said it believes should be evaluated in detail, as each exhibits the potential to realize greater value with than Charter Hall's proposed joint venture. These alternatives include: sale of Charter Hall Office's US Assets in logical subsets or as individual assets via a broad marketing process; sale of a 50% to 100% interest in Charter Hall Office's U.S. Assets to a public or private entity via a broad marketing process; an IPO or a spin-off of Charter Hall Office's US assets.

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Facebook Friends Oracle in Sale/Leaseback of New HQs Facebook formally announced this week that it is moving its headquarters to the old Sun Microsystems campus in Menlo Park. Facebook said in a press release that it has been looking for a space that suits its long-term business needs and allows it to recreate the "small-community feel." David Ebersman, Facebook's chief financial officer, formally announced the move in a news conference at the 57-acre Menlo Park property. The campus consists of nine buildings along Network Circle totaling 920,405 rentable square feet. According to the company, it will acquire the former corporate campus of Sun Microsystems, which was vacated when that company was bought by Oracle last year.

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Facebook then signed a leaseback deal with Oracle for the property, under which it will rent the nine building campus for 15 years with an option to buy it after five years. Financial terms of the deal were not disclosed. Facebook also purchased the adjacent property owned by an affiliate of Ford Motors. The two properties are connected by an underground commuter tunnel, but Facebook has no plans to develop that property at this time. Employees will move to the new campus in waves, the company said, beginning with the first group in June or July. Facebook currently employs more than 2,000 people, of which about 1,400 of them are in Palo Alto. Facebook will continue to occupy its offices in Palo Alto through the rest of the year and possibly into next year, the company said. John Tenanes, Facebook director of global real estate, said the company intends to expand its transit programs to help employees get to work without driving. Facebook officials said the deal was brokered by Cornish & Carey, and the general contractor currently renovating one of the buildings on the new campus is SC Builders Inc. of Sunnyvale.

Hines Antarctica JV Left in the Cold as Calif. Cancels Portfolio Sale In a move that he hopes will save taxpayers $6 billion dollars over the next 35 years, California Governor Jerry Brown called off the previous administration's "short-sighted" proposal to sell and leaseback 11 state properties. Hines received more bad news in California this week when a group of temporary justices assembled by California's Supreme Court denied the state's request to California had approved the sell and leaseback 11 of the state's office buildings to a consortium led by Hines and international private equity firm Antarctica Capital Real Estate. The Hines consortium offered to pay $2.33 billion for the 7.3 million-square-foot portfolio. Prior to Brown's announcement cancelling the deal, the California Supreme Court backed up an appellate court ruling blocking the sale in response to a lawsuit claiming the transaction was an illegal gift of state funds to private investors. "The sale and leaseback proposal was short-sighted and would have cost taxpayers billions of dollars in the long-run," said Brown. "Selling and leasing back the state's buildings for one-time gains is not prudent." The 2009-10 budget authorized the sale and leaseback of 11 state properties, and the 2010-11 budget assumes $1.2 billion in revenues from this deal, Brown said. Under the original plan, once the properties were sold the state would pay approximately $56 million annually to lease them for state use, increasing over time. According to the Legislative Analyst's Office, Brown said the overall the deal is equivalent to borrowing at a 10.2% interest rate—double what the state pays for its general obligation bonds. In total, over 35 years the sale and leaseback plan would cost California $6 billion more than state ownership.

CoStar to Sell DC Headquarters Bldg. for $101M After Buying it for $41M Drawing on its Own Extensive Research and Forecasts To Purchase Distressed Asset at Market Bottom, CoStar Contracts To Profit from Sale of DC HQs CoStar Group Inc. (Nasdaq:CSGP), commercial real estate's leading provider of information, analytic and marketing services, has agreed to sell its headquarters building at 1331 L St. NW in Washington, DC, for aggregate consideration of $101 million in cash to GLL L-Street 1331 LLC, an affiliate of Munich-based GLL Real Estate Partners GmbH.

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CoStar acquired the two-year-old, Class A building through a wholly owned subsidiary one year ago for $41.25 million, or approximately $243 per square foot. The purchase price was one of the lowest paid on a per-square-foot basis for a new office building in Washington, DC, in more than a decade. CoStar occupies the majority of the office space in the building after relocating its headquarters office from Bethesda, MD. CoStar Group's headquarters will remain at the LEED certified, 169,429-square-foot building under a long-term lease to be signed with the new owner at closing. The building sale is scheduled to close later this month. CoStar Realty will enter into a 15-year lease, with two five-year extension options, with GLL for 149,514 square feet of office space effective June 1, 2010, and expiring May 31, 2025. The initial base rent will be $38.50 per square foot of occupied space, escalating 2.5% per year commencing June 1, 2011. CoStar’s occupied space under the lease will consist of the entire rented premises as of June 1, 2011. The effective date of the lease will be the date as of which CoStar Realty commenced occupation of the space, June 1, 2010. Under the sale agreement, up to $15 million of the consideration will be held in escrow for the purpose of funding additional build-out and planned improvements for CoStar's space and for the common areas of the building. With the purchase and leaseback, GLL will acquire an ultra-high quality asset a few blocks from the White House and an investment that offers an attractive yield spread over U.S. Treasuries as well as the inflation protection that commercial real estate can provide. GLL has been a very active investor in the U.S. market, and has purchased a number of other trophy properties. "GLL is a highly respected, hands-on owner who will be a great caretaker for our headquarters facility and will also benefit from this long-term investment in the highly sought after Washington, DC, office market," said Andrew C. Florance, CoStar founder and CEO, in a statement announcing the agreement. "We couldn't be happier to secure a long-term lease agreement with GLL as the new owner of this trophy asset." With more than 1,000 researchers, economists, software developers and analysts focused solely on commercial real estate, CoStar has unmatched insight and knowledge of commercial real estate markets. By leveraging its own extensive data and forecasting capabilities to accurately predict the bottom of the most recent commercial real estate market cycle, CoStar was able to strategically time the purchase and sale of the building as well as predict the direction and timing of its recovery with a high level of confidence. Although the trophy properties in prime markets are already well into recovery, Florance said he believes that in every major U.S. market there are dozens of distressed, high quality buildings and dozens of large, creditworthy tenants, presenting opportunities to create similar arbitrage value-creation plays. "I believe there are many other property types, geographic areas, and sub-segment opportunities in the commercial real estate sector that are still at varying stages in the cycle," said Florance. "The opportunity to know what properties are in each of those segmentations and cycles is why our customers use CoStar." John Benziger, senior vice president of Lincoln Property Co., represented CoStar in the acquisition of 1331 L St. William M. (Bill) Collins, executive managing director, Paul J. Collins, executive managing director, John A. (Drew) Flood, senior managing director, W. Judson Ryan, senior vice president, and James P. Cassidy, senior vice president of Cassidy Turley Commercial Real Estate Services, represented CoStar in the building sale. In an interesting aside, the idea for starting CoStar arose during a lunch Florance had with John Benziger and Bill Collins 25 years ago. The building sale and leaseback agreements do not affect the company's fourth quarter of 2010 or full year of 2010 results. The sale-leaseback will likely be accounted for as an operating lease and will result in additional rent expense in 2011. The 2011 expense impact is expected to be approximately $4.5 million to $5 million.

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Google Teams Up with Aegon on Low-Income Housing Fund Aegon USA Realty Advisors LLC, a commercial real estate investment and management arm of the Aegon companies, has teamed up with web search powerhouse Google Inc. on a Low-income housing tax credit fund (Garnet LIHTC Fund XXV LLC). The first tranche of the fund closed late last month and includes a $28 million investment in two low-income housing developments in Minneapolis, MN, (Riverside Plaza Apartments) and Santa Fe, NM, (Villa Alegre Senior Apartments). The fund will provide a major source of funding for the rehabilitation and construction of 1,353 units for families and senior citizens. According to Christoph Gabler, senior vice president for Aegon USA Realty Advisors, the Riverside Plaza Apartments development will include the rehabilitation of nine multi-story residential buildings with 1,303 units for families that are home for approximately 4,500 residents. The Villa Alegre Senior Apartments development will include the new construction of 25 one-story buildings that will create 50 units for senior citizens. The project will also obtain at least LEED Gold status in which the units are expected to use 50% less energy than the energy of a standard home and will include ground source geothermal heating and cooling and solar panels for electricity generation.

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Florida's Largest Developer Considering Strategic Alternatives The St. Joe Co., one of Florida's largest real estate development companies, has decided to explore financial and strategic alternatives. St. Joe's board intends to consider the full range of available options including a revised business plan, operating partnerships, joint ventures, strategic alliances, asset sales, strategic acquisitions and a merger or sale of the publicly held company. In December, St. Joe added two new board members Bruce R. Berkowitz and Charles M. Fernandez, managing member and president, respectively, of Fairholme Capital Management. Fairholme Capital currently manages assets valued at $20 billion and its affiliates hold approximately 29% of the outstanding shares of common stock of St. Joe. "Bruce and Charles, both of whom bring strong experience and valuable strategic insight to our team, have a deep understanding of our business and its inherent long-term potential," said Hugh M. Durden, chairman of St. Joe. "These attributes, coupled with their capital markets expertise, will be immensely valuable to St. Joe going forward." Berkowitz added that, "St. Joe has uniquely valuable assets and some of the most attractive, concentrated and well-managed real estate in the U.S. The value is in its development expertise, communities, infrastructure, entitlements, master plans, timberlands and most importantly the company's long-term vision." St. Joe owns 576,000 acres of land, concentrated primarily in Northwest Florida between Tallahassee and Destin. The company noted that there can be no assurance that the exploration of strategic alternatives will result in any transaction.

Ultimate Electronics Opts To Go Out of Business Ultimate Acquisition Partners LP, the parent company of retailer Ultimate Electronics, has hired Gordon Brothers Retail Partners as consultant for the liquidation of its stores as part of its Chapter 11 bankruptcy reorganization. The company plans to begin closing sales immediately at all 46 of its stores. Prior to the commencement of its bankruptcy case late last month, Ultimate Electronics said it faced a variety of negative factors including: a significant loss in its operations for the 11 months ending Dec. 31, a loss of vendor support in providing it goods and services and a loss of liquidity. In addition, Ultimate Acquisitions was unable to line up any debtor in possession financing to continue operating during its Chapter 11 proceedings.

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2820 W Chandler Blvd Chandler, AZ 32,241

7435 France Ave South Edina, MN 31,830

845 N 54th St Chandler, AZ 33,487

12201 Elm Creek Blvd Maple Grove, MN 32,373

17510 N 75th Ave Glendale, AZ 34,827 12350 Wayzata Blvd Minnetonka, MN 15,000

1655 S Stapley Dr Mesa, AZ 33,948

1723 W County Rd B-2 Roseville, MN 17,393

21001 N Tatum Blvd Phoenix, AZ 34,195 8401 Tamarack Rd Woodbury, MN 36,253

15020 N Northsight Blvd Scottsdale, AZ 34,277

14850 Manchester Rd Ballwin, MO 33,500

4380 N Oracle Rd Tucson, AZ 33,959

185 Gravois Bluffs Plaza Dr. Fenton, MO 34,030

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1955 28th Street Boulder, CO 35,000 301 Costco Way Saint Peters, MO 33,305

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7207 N Academy Blvd Colorado Springs, CO 34,800 4700 Cutler Ave Albuquerque, NM 36,926

3909 E Evans Ave Denver, CO 19,392 741 S Rainbow Blvd Las Vegas, NV 31,588

9657 E County Line Rd Englewood, CO 41,250

2555 E Tropicana Ave Las Vegas, NV 33,000

4357 Corbett Drive Fort Collins, CO 24,000

161 Washington Ave Ext Albany, NY 37,261

14391 W Colfax Ave Lakewood, CO 40,371 2001 Walden Ave Cheektowaga, NY 33,190

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2120 W Memorial Rd

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100 Commercial Rd Leominster, MA 39,936 6701 Slide Rd Lubbock, TX 33,107

251 Highland Avenue Seekonk, MA 28,000

507 W Expressway 83 McAllen, TX 32,000

14232 Burnhaven Dr Burnsville, MN 14,456 4585 S 76th St Greenfield, WI 42,460

Abercrombie & Fitch To Close 56 Stores Abercrombie & Fitch Co. announced that it will be closing 56 stores this quarter. These closures are in addition to the eight permanent closures that occurred in prior quarters during the fiscal year. While the company did not identify the stores to be closed, it did say that it expects to record an impairment charge for the fourth quarter of fiscal 2010 ended Jan. 29, 2011, as a result of its fiscal year-end review of long-lived store-related assets. The charge will include a substantial portion of the approximately $58 million net book value associated with Gilly Hicks stores, as well as certain other store-related assets. The Gilly Hicks charge relates to the stores constructed using the original large format store of around 10,000 gross square feet. The company expects that future stores will be constructed using the new smaller format of approximately 5,000 gross square feet. The company specified that the impairment charge does not affect the company’s operating plans for Gilly Hicks. Abercrombie & Fitch currently operates 18 Gilly Hicks stores in the United States. At the end of fiscal 2010, the company operated a total of 1,069 stores. For the fiscal year ended Jan. 29, the company reported net sales of $3.469 billion, an 18% increase from net sales of $2.929 billion last year.

BJ's Considering Sale of the Whole Company BJ's Wholesale Club Inc. in Westborough, MA, is evaluating strategic alternatives, including a possible sale of the company. The company has not made a decision to pursue any specific strategic transaction, so there can be no assurance that the company would be sold. Nor has BJ's set a timetable for the process.

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The company has engaged Morgan Stanley & Co. Inc. as its financial advisor to assist in the process. Last month, BJ's closed five underperforming stores (three in the Atlanta market, one in Sunrise, FL, and one in Charlotte, NC). BJ's reported that for the fourth quarter ended Jan. 29, 2011, total sales increased by 7.3% to $2.9 billion from $2.7 billion last year, and comparable club sales increased by 3.8%, including a contribution from sales of gasoline of 2.1%.

TA Travel Centers Cuts Deal for Reduced Rents TravelCenters of America LLC in Westlake, OH, entered into lease amendments with Hospitality Properties Trust, its landlord on 185 gas station/truck stops, for reduced rents. One lease for 145 travel centers in 39 states operated under the ―TA‖ or ―Travel Centers‖ brands extends to 2022. The original lease required annual rent of $170.1 million/year beginning this month and increasing to $175.1 million/year on Feb. 1, 2012, plus increases based upon percentages of increases in gross revenues starting in 2012. Under amended terms, the current rent has been reduced to $135.1 million/year. The rent will increase to $140.1 million/year effective Feb. 1, 2012, plus increases thereafter based upon percentages of increases in gross revenues. In a second lease for 40 travel centers in 25 states operated under the ―Petro‖ brand extends to 2024. The original lease required annual rent of $66.2 million/year plus increases starting in 2013 based upon percentages of increases in gross revenues. Under the amended terms, the current rent is reduced to $54.2 million/year plus increases starting in 2013 based upon percentages of increases in gross revenues. In addition, under the original leases, Hospitality Properties Trust had deferred $150 million of rent until Dec. 31, 2010. Under the new agreement, that $150 million has been further deferred, without interest, so that $107.1 million will be due in 2022 and $42.9 million shall be due in 2024.

First Credit Union Closure of 2011 Among Latest Lender Failures Four more financial institutions joined the list of failures this past week including two in Georgia and one each in California and Illinois. In Georgia, Renasant Bank in Tupelo, MS, acquired all of the deposits and substantially all of the assets of American Trust Bank in Roswell, GA, in a Federal Deposit Insurance Corp. (FDIC) assisted transaction. The acquisition gives Renasant Bank three new locations in North Georgia with branches in Roswell, Alpharetta, and Cumming. As of Dec. 31, American Trust Bank had approximately $238.2 million in total assets. Renasant Bank acquired approximately $145 million of those assets including loans consisting primarily of commercial & industrial and commercial real estate loans. The FDIC retained substantially all of American Trust’s nonperforming loans and other real estate owned. As of Dec. 31, American Trust held $20.3 million in foreclosed assets, including $8.6 million in commercial real estate properties. It had another $11.6 million in past due commercial real estate loans.

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About $94.3 million loans Renasant acquired, except for a small portfolio of consumer loans, are covered by a loss share agreement in which the FDIC will reimburse Renasant Bank for 80% of the losses incurred on these loans. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $71.5 million. Also in Georgia, BankSouth in Atlanta acquired North Georgia Bank through a purchase and assumption agreement with the FDIC. North Georgia Bank in Watkinsville was closed by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver. As of Dec. 31, North Georgia Bank operated two branches and had $153.2 million in total assets. BankSouth agreed to purchase $123.9 million of those assets, including all of the loans. The FDIC will retain the remaining assets for later disposition. The FDIC and BankSouth entered into a loss-share transaction on $120.1 million of North Georgia Bank's assets. The FDIC estimates that the cost to its DIF will be $35.2 million. In California, the state Department of Financial Institutions closed and ordered that Oakland Municipal Credit Union be liquidated, citing inadequate capital. Oakland Municipal was a federally insured, state-chartered credit union based in Oakland with $88 million in assets and serving 7,800 members. The National Credit Union Administration was appointed liquidating agent, which then sold the assets to Western Federal Credit Union in Manhattan Beach, CA. Western Federal will continue to serve members of Oakland Municipal Credit Union at the existing branch office at 150 Frank H. Ogawa Place in Oakland. And lastly in Illinois, Northbrook Bank and Trust Co. in Lake Forest, IL, acquired certain assets and liabilities of Community First Bank-Chicago in an FDIC-assisted transaction. Community First Bank, was closed by the Illinois Department of Financial and Professional Regulation, operated one location in Chicago and had approximately $51.1 million in total assets. Northbrook acquired substantially all of CFBC's assets at a discount of approximately 8% and assumed all of the non-brokered deposits at a premium of approximately 0.5%. In connection with the acquisition, Northbrook entered into a loss sharing agreement with the FDIC whereby Northbrook will share in losses with the FDIC on certain loans and foreclosed real estate valued at $42.8 million. The FDIC estimates that the cost to its DIF will be $11.7 million.

$9 Bil. Citizens Republic's Ratings Lowered to Junk-Level Status Fitch Ratings downgraded the long-term and short-term Issuer Default Ratings (IDRs) for Citizens Republic Bancorp Inc. and its principal banking subsidiaries from 'B-/B' to 'CCC/C,' levels normally considered extremely speculative with substantial risks. Citizens Republic is a $9.9 billion bank holding company based in Flint, MI, with operating offices primarily throughout Michigan, Indiana, Ohio and Wisconsin, markets that continue to experience declines in housing and CRE values, and persistently high unemployment rates.

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Fitch's downgrade of Citizens Republic's ratings reflects the continued erosion of the company's capital levels and its still high level of non-performing assets (NPAs), despite the company's reasonably good progress in executing its problem asset resolution strategy. Non-performing assets as a percentage of loans plus other real estate owned declined to a still elevated 4.55% as of Dec. 31, from 7.50% at Sept. 30, 2010, due to a mix of working out individual loans as well as bulk sales of problem loans. These actions served to increase net charge-offs during the fourth quarter of 2010 to $159.3 million or 9.46% of average loans. The company also boosted its provision during the quarter by $131.3 million, thereby pushing the allowance for loan losses up to 4.76% as of Dec. 31, 2010. However, this higher provisioning also caused Citizens Republic to incur a $106 million net loss in the fourth quarter, which served to continue the erosion of the company's capital levels. Given the continued weak economic environment in Citizens Republic's core markets, Fitch said it anticipates the company could experience additional credit stress, particularly within the company's large commercial real estate and residential mortgage portfolios. According to Fitch, while Citizens Republic's overall delinquency rates have declined, the company still had $110.9 million of commercial inflows to NPAs during the fourth quarter, $20 million of which was due to disposition activity. Fitch said it expects that Citizens Republic will continue to operate at a loss over the near term. These losses, combined with the company's continued execution of its problem asset resolution program, will continue to erode capital levels and prevent the company from becoming current on its preferred dividend payments over the near term.

BankAtlantic Selling 19 Tampa Branches BankAtlantic agreed to sell its Tampa – St. Petersburg franchise to PNC Bank. Under the agreement, BankAtlantic will sell its 19 branches and two related facilities in the Tampa – St. Petersburg area and the associated deposits (approximately $350 million), to PNC. BankAtlantic owns seven of its Tampa branch locations and leases the other properties. PNC has agreed to pay a premium for the deposits assumed by PNC in the transaction plus the net book value of the acquired real estate and fixed assets associated with the branches and facilities. BankAtlantic had previously announced last summer that it intended to concentrate its efforts in South Florida, its core market, and was beginning to seek buyers for its Tampa operations. The sale of the Tampa locations will allow BankAtlantic to focus its efforts on its primary footprint, consisting of 79 branches, in Southeast Florida. The transaction is anticipated to close during June 2011.

Real Money: Note & Loan Purchases Colony Capital is partnering with Argent Management LLC to acquire and manage an $800 million portfolio of real estate acquisition, development and construction (ADC) loans that Colony recently acquired from the Federal Deposit Insurance Corp. (FDIC). Combined with another $400 million portfolio that Argent has already been working with Colony in managing, the combined book value of these portfolios represents $1.2 billion in assets. Argent Management is a provider of real estate services to institutional investors, private owners, developers and financial institutions. The FDIC seized these loans from failed banks, and these assets include numerous residential and commercial developments that are located in Florida, Michigan, Utah and more than 15 other states.

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Easton Lynd Management, a commercial real estate investment and management company based in Miami, made a major investment in a pool of distressed real estate assets scattered throughout the United States. The company purchased $62 million worth of notes on 14 office, industrial and retail properties in Florida, Texas, Illinois, Indiana, New York, Ohio, Maine, and Washington DC. The total amount of space is 1.3 million square feet. The seller was an undisclosed special servicing agent assigned to handle disposition of the distressed assets. Some of the notes are associated with properties owned by the lender, while the balance is connected to properties still going through the foreclosure process. The note purchase is the fourth major acquisition that The Easton Group has been involved with in the past 90 days. Feldman Equities Inc. acquired a distressed mortgage note secured by a Class A, 134,065-square-foot multi-story office building in Tampa, FL. ARG Capital Partners arranged joint venture equity totaling $16 million for an all cash closing within 5 days of notification that the previous partner had backed out—with the closing of the acquisition taking place 15 days later. Marathon Asset Management LP closed on the acquisition of the East Village Shopping Center in Roswell, GA. The deal involved the purchase of a distressed senior mortgage and simultaneous transfer of ownership through a pre-negotiated deed in lieu of foreclosure. East Village is the premier "power center" in a high-density, affluent Atlanta suburb. Built in 2008, the property includes 83,319 square feet of existing retail space, plus 112,296 square feet of planned development for which much of the infrastructure, planning and pre-development work has been completed. East Village is shadow-anchored by a Target Corp.-owned, 181,877-square-foot Super Target store, rounding out East Village's approximately 377,492-square-foot total project size. Marathon worked closely with the former borrower, Concordia Properties. Mountain Real Estate Capital acquired a $20 million note held by a bank group led by Regions Bank secured by the Southcliff community minutes from historic Asheville, NC. MREC will work with the current developer to restructure the debt and allow for a smooth transition of ownership. The firm will also infuse a substantial investment of new capital for additional amenities and site improvements. MREC plans to reposition sections of the project and accelerate development and sales to qualified homebuilders. Southcliff is an exclusive gated community consisting of 276 luxury wooded homesites on 400 acres with mountaintop views of North Carolina's Blue Ridge Mountains. Wintrust Financial Corp. acquired certain assets and the assumption of certain IL of the mortgage banking business of Woodfield Planning Corp. of Rolling Meadows, Illinois. A significant portion of the purchase price for the Woodfield Planning Corporation assets is conditioned upon certain future profitability measures. With offices in Rolling Meadows and Crystal Lake, IL, Woodfield Planning originated approximately $180 million in mortgage loans in 2010.

Atlas Copco Closing Three Facilities in Move to Houston Stockholm-based Atlas Copco Compressors LLC plans to consolidate three of its U.S.-based facilities into one new common facility in Houston. 125 people are currently employed at the three locations. The objective is to increase competitiveness by creating a competence center for these products. The new factory will produce a wide range of custom designed products and complete packaged solutions for customers across North and South America. It will also produce selected standard products. Production from the three facilities - Pneumatech, Greenfield Compression and Atlas Copco CustomDesign - will be moved to a new custom fitted competence center in Houston. It will capitalize on the close proximity to customers in the oil and gas industry, readily available supplier support for engineered components and easy logistical access to a number of major customer groups and transport routes. The new operation is expected to be up and running by year-end 2011. Pneumatech is currently based at 4909 70th Ave. in Kenosha, WI; GreenField Compression at 909 N. Bowser Road in Richardson, TX; and Atlas Copco Custom Design at 6755 Willow Brook Park in Houston.

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The majority of the employees affected will be offered relocation to the new competence center. Employees, that are not relocating, will receive severance benefits which include assistance with career transitions and support planning.

Irvine Sensors Letting Go 19% of Staff Irvine Sensors Corp. in Costa Mesa, CA, is streamlining operations in a move expected to produce initial annualized expense reductions of more than $1.4 million. The savings will come from an approximate 19% reduction in force, consisting primarily of staff not fully utilized in support of the current product and revenue focus. Some of these staffing-related savings are anticipated to be temporary, however, as the firm plans to expand its product-specific marketing staff during its current fiscal year.

RealNetworks Downsizing By 10% Media software and services company RealNetworks Inc.'s final step in its restructuring efforts will include the elimination of 130 positions, representing an approximate 10% reduction in the company's workforce. Eliminated positions span most geographies and include positions in engineering, sales, marketing and administration. Seattle-based RealNetwork said it will continue to focus and hire in growth areas, including software as a service, media cloud services, socialized games and other emerging products. RealNetworks plans to commercially launch Unifi, its award-winning and first personal media cloud service, in the first half of 2011. As a result of the reduction in workforce, RealNetworks will take a restructuring charge of approximately $3 million in the first quarter and anticipates $11 million in annualized cost savings.

Cooper-Standard Plant in Bowling Green Getting Hosed Due to overcapacity in the North American automotive industry, Cooper-Standard Automotive in Novi, MI, will permanently close its hose manufacturing facility in Bowling Green, OH. Relocation of the facility's business and equipment into existing Cooper Standard locations will occur over the next 12 months. The decision follows an extensive review of the company's current hose manufacturing capacity, as well as future market trends and forecasts for vehicle production rates in North America. As a result of this analysis, the Cooper Standard management team determined that there is not sufficient production volume to continue operating all three of its North American hose facilities. The current Bowling Green hose business will be moved to Cooper Standard's existing facilities in Mt. Sterling, KY, and Atlacomulco, Mexico. Both facilities currently produce similar products to the Bowling Green facility and can quickly incorporate the transferred business. The Bowling Green hose operation employs approximately 200 people and manufactures low-pressure rubber hoses for a variety of automakers.

Symmetricom Streamlining in Santa Rosa Symmetricom Inc. is undertaking a restructuring plan to move its Government Business Unit's engineering and new product introduction team from Santa Rosa, CA, to its San Jose office to focus on networking platform development and promote collaboration with other San Jose based engineering resources.

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In connection with the plan, the company will also move the Santa Rosa manufacturing operation to its facility in Beverly, MA, and transition the manufacture of certain parts from Santa Rosa to a contract manufacturer. The company plans to eliminate approximately 55 positions from the Santa Rosa facility and add approximately 35 new or replacement positions in its San Jose and Beverly facilities. The company expects to incur approximately $2.5 million in cash restructuring charges for severance and relocation. The engineering transition will begin in February 2011 and the manufacturing transition is expected to begin in July 2011. The transition is expected to be completed by December 2011. Once completed, the company expects annual savings of approximately $2.5 million per year and plans to use the savings to pursue growth opportunities.

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Courier Considering Cutting One-Color Factory Courier Corp. in North Chelmsford, MA, is considering closing its manufacturing plant in Stoughton, MA, due to the impact of technology and competitive pressures affecting the one-color paperback books in which the plant specializes. Courier will be soliciting input from the union that represents some of the plant employees to ensure that employees' interests are represented as it work towards a final decision, which is expected by the end of February.

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Courier's Stoughton plant currently employs 110 people. This one-color plant is the smallest and least versatile of Courier's six manufacturing facilities, and has seen its volume decline in recent years as customers have increasingly turned to four-color production, shorter print runs and more efficient short-run alternatives such as digital printing, in which the company has invested heavily in the last year. "Advancing technology, increasing customization, shorter run-lengths and the continuing shift to four-color have led to reduced demand for one-color work and tighter competition for the one-color work that remains," said James F. Conway III, Courier chairman and CEO. "We have responded by investing in Massachusetts with new HP digital printing equipment, which offers outstanding quality and improved efficiency across the board from one- to four-color."

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Watch List: Newly Specially Serviced Loans The following information for these lead listings was provided by Investcap Advisors LLC, an industry leader in providing surveillance data on loan and commercial real estate performance underlying the CMBS market.

Property Address City, State Property Type Curr. Bal. CMBS

Special Servicer

Reason for Transfer

Laurel Lakes Offices

8003 - 8043 Laurel Lakes Court Laurel, MD Office $49,476,387

MLCFC 2007-9

LNR Partners

Monetary Default

York Center 2001 York Road Oak Brook, IL Office $27,967,440

CSFB 2001-CF2

Berkadia Commercial Mortgage

Imminent Default

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Property Address City, State Property Type Curr. Bal. CMBS

Special Servicer

Reason for Transfer

Sand Lake Corners

8111 S. John Young Parkway Orlando, FL Retail $20,708,572

BACM 2007-2 Helios

Imminent Default

The Reserve at Stinson 730 Stinson Drive Norman, OK Multifamily $22,532,317

JPM 2005-CIBC13

LNR Partners

Imminent Default

The Veranda at Centerfield

7700 Willow Chase Blvd. Houston, TX Multifamily $21,037,560

JPMC 2005-LDP5

CWCapital Asset Management

Monetary Default

Villas at Coronado Apartments

9111 Lakes of 610 Drive Houston, TX Multifamily $20,842,029

JPMC 2005-LDP5

CWCapital Asset Management

Monetary Default

Independent Square

1 Independent Drive

Jacksonville, FL Office $85,000,000

Wachovia 2006-C25

CWCapital Asset Management

Imminent Default

Bank of America Plaza

600 Peachtree Tree Atlanta, GA Office $363,000,000

JPM 2006-CIBC17 & JPM 2006-LDP9

LNR Partners

Imminent Default

Lake Marriott and Orchard Parkway

3001 3003 & 3005 Tasman Drive 3032 & 3053 Bunker Hill Lane 5101 Patrick Henry Drive & 5104 Old Ironsides Drive

Santa Clara, CA Office $107,250,000

GCCFC 2007-GG9

LNR Partners

Imminent Default

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