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HCFA project boosted permit activity in MayWork...


HCFA project boosted permit activity in May

Work on the new headquarters of the U.S. Health Care Financing Administration has already had one salutary effect -- it pushed statistics for Baltimore-area building permits up 35 percent in May, the Baltimore Metropolitan Council reports.

The initial permit for $10 million of work at what is expected to become a $122 million complex pushed the total value of nonresidential building permits issued in May to $21.4 million, up from $15.8 million in May 1992.

But the council said the improvement in permits for construction, while otherwise modest, was across-the-board. Among local jurisdictions, only Howard County saw a decline in permits vTC compared with May 1992.

Michael Conte, an economist at the University of Baltimore, said the figures were consistent with the conventional wisdom about commercial building: The bottom is here, but not much of an uptick yet.

"It's still very much, on the nonresidential side, dead in the water," Mr. Conte said. "That's pretty much what you would expect. There's still a lot of empty space out there."

The council said permits for renovations and additions to existing buildings, which have been a lifeline for recession-ravaged contractors, fell 13 percent in May, to $42.1 million. The biggest permit for an addition went to North Arundel Hospital, for $6 million worth of construction.

HCFA's was easily the biggest permit awarded in Baltimore County, while the hospital was the biggest newly approved job in Anne Arundel. Carroll County's only major permit was for a new $800,000 Denny's restaurant in Eldersburg; Howard County's biggest was for a $2.4 million auto dealership in Columbia; Lever Bros. Co.'s $650,000 of industrial alteration was the biggest permit in Baltimore; and an $850,000 building for Emmorton Baptist Church was the biggest approved in Harford County.

BTR's shareholders to vote on merger plan

BTR Realty Inc. of Linthicum said yesterday that shareholders will vote Aug. 20 on a plan to merge the company with a newly formed real estate investment trust, paying down BTR's debt and paying shareholders a $5 million special dividend.

"BTR shareholders will receive a special dividend of approximately 58 cents a share," said BTR President F. Patrick Hughes. "Additionally, the company's shares will trade at between $3 and $4 a share. Three months ago, it was at 2 a share."

Mr. Hughes said that if shareholders approve the deal, "BTR can form a rational dividend policy and will be de-leveraged. The money that used to pay interest will pay investors dividends and also give the company a platform on which to grow."

BTR, like many developers,was beaten up by the real estate recession, which exposed a series of development miscues concentrated in suburban Phoenix, Ariz.

Its best-known local ventures include the Harford Mall, York Road Plaza and the Gateway International office complex near Baltimore-Washington International Airport.

The plan calls for a series of interrelated transactions. A newly formed entity called Mid-Atlantic Realty Trust will issue between $60 million and $100 million of stock and debentures, according to a July 19 letter to stockholders from BTR Chairman Archibald Mckay.

The money will be used to pay down BTR's debt by $73 million, a major bite in the $150 million of liabilities the company reported March 31. After the offering, Mid-Atlantic will absorb BTR.

REITs outperform overall stock market

Real estate investment trusts far outperformed the overall stock market in the first half of the year, as Wall Street's recent love affair with REITs was rekindled in June after two slow months in April and May, Salomon Bros. Inc. reports.

Salomon's analysts S. Michael Giliberto, David J. Kostin and Bedford H. Lydon III said the total return for equity REITs not connected to health care rose 17.6 percent in the first half of the year, compared with 4.9 percent for the Standard & Poor's 500stock index.

The analysts said that the trusts, in vogue because they are seen as a lower-risk, income-oriented way to invest in real estate at the bottom of the cycle, raised $1.8 billion in initial public offerings in the first half of the year, including $293 million in June.

An additional $722 million of initial offerings are in registration, the analysts said, including a $215 million offering of a majority stake in the Baltimore-based parent of Town & Country apartments.

CES groundbreaking will mark win for Md.

Maryland officials will mark an economic development victory -- or the staving off of a defeat -- Friday, when they will join Card Establishment Services Inc. officials to break ground for the company's 120,000-square-foot credit-card and check-transaction-processing center in Hagerstown.

CES is beginning work on the facility a year after an investor group bought the company from Citicorp. Since the sale, CES has stayed in its previous Hagerstown location.

Maryland turned back an effort by West Virginia to lure the new facility.

CES spokeswoman Julia Moretti said the company employs about 400 people in Hagerstown. The company's headquarters is on Long Island.

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