King of Beer May Not Be The Only American Icon Going Foreign
By Darcie Lunsford
If this month’s announcement that the king of American beer will be sold to Belgium’s InBev leaves a bad taste in your mouth, then South Florida economist Manuel Lasaga says you’ll have a lot to swallow this year.
The devaluation of the U.S. dollar means that more companies than Anheuser-Busch Cos. – producer of Budweiser and other iconic American brews – are more vulnerable than ever to foreign takeovers.
“The dollar is so weak and European companies have cash,” said Lasaga, president of StratInfo in Coral Gables. “The U.S. is for sale.”
The euro is now worth about $1.58, which means European countries get almost a 60 percent discount when buying American firms.
The trend is something South Floridians should be used to. The region’s high-profile corporations have been falling into international hands at a rapid pace in recent years.
Security firm Wackenhut, supplement maker Rexall Sundown, blood plasma researcher Nabi Biopharmaceuticals, Ivax Corp., TotalBank and City National Bank of Florida are just a few that have sold to foreign operators.
Last year, a record $414 billion in U.S. assets sold to foreign interests, according to a report in Fortune magazine. But don’t worry that Americans will soon become mere wage earners of foreign conglomerates, Lasaga said. Be happy that these acquisitions are providing capital and liquidity to the parched U.S. economy.
“I don’t see this as a danger,” he said. “I see it as an opportunity and a challenge.” Gary Schumann, senior director of international business development for Enterprise Florida, said foreign direct investment is the lifeblood of South Florida – as well as the rest if the state. It pumped $26.4 billion and 226,000 jobs into Florida’s economy, according to the most recent data available from the U.S. Department of Commerce. “It is great thing,” Schumann said. “On average, foreign companies pay higher wages then U.S. companies by 15 percent.”
South Florida's Residential Tax Values Fall As Commercial Tax Assessments Go Up:
By Oscar Pedro Musibay and Brian Bandell
According to a Business Journal analysis of 2008 property tax, residential property values caved under the weight of the economic slump, and commercial property values increased across South Florida.
The rolls, which reflect the property appraiser's reassessed value of a property for tax purposes as of Jan. 1, were filed with the state on July 1.
This year's commercial property value increases, however, aren't as severe as the double-digit percentage jumps seen in recent years.
The total market value of existing commercial properties rose 2.7 percent in Palm Beach County, 5.2 percent in Broward, and 5.8 percent in Miami-Dade, according to county tax rolls released July 1.
Tax bills begin arriving in South Florida mailboxes in mid-August.
Even if your property value went down, your taxes could still go up, as many county and city governments are still grappling with whether to raise millage rates to compensate for the declining tax base.
But, any boost in commercial value strikes some as not reflecting the reality of rising vacancy and sinking rents.
"Typically, in both an up and down market, commercial property tracks behind the trend in residential," said Jeff Mooallem, executive VP of development for Aventura-based Turnberry Associates, which owns properties such as the Aventura Mall, Fairmont Turnberry Isle Resort and Turnberry Plaza office building. "So, when there's a decline in residential, commercial property declines slightly. It seems like the tax assessor's office might be the last to catch on to that."
Ron Bergeron, whose Pembroke Pines-based Bergeron Properties & Investment Corp. owns commercial and industrial properties across Florida, said rents are going down and vacancies are increasing as the economy struggles. That should lower the values of these properties, but Bergeron said that's not what he's seeing.
"I'd be floored if you could sell any of it in this market today for its assessed value," he said. "We've had a tremendous devaluation in the last two years. The property taxes on our property keep going up, despite that."
Bergeron said he passes the property tax onto his tenants, including many small businesses.
In Broward County, the property appraiser's office inspects all parcels once every three years, said Robert Zbikowski, manager of the appraiser's real property division. In a year when a property isn't inspected, it uses a formula to determine the change in value of similar properties.
Appraisers generally look at three things:
(1) Comparable market sales
(2) The rental income of the property, based on its actual rent and vacancy rate or comparable property performance, minus operating expenses. Property owners receive a survey every year asking for this information.
(3) The replacement value of the structure, plus the value of the underlying land
Appraisers must also look at a commercial property's highest and best use. That means they evaluate what the most valuable use would be with its underlying zoning, and compare that to the sales price of parcels with similar allowances.
The challenge for the appraisers and the baggage for many property owners is that comparables from the last couple of years are at record highs due to the real estate sales boom. Florida law requires all properties to be reassessed on Jan. 1 to reflect prior-year sales and income.
For many of the region's trophy assets, however, there still remains a huge crevice between what deep-pocketed investors are paying and what the property appraiser is assessing value at.
Zbikowski said the tax value of existing commercial and industrial property in Broward did not go up across the board.
Some properties saw their values decline. Waterfront properties and some submarkets had high demand and strong rents, but other office and retail centers that depended on the residential market struggled.
"Values are going down and rent is going down, but there's not a lot of sales to reflect the new adjusted value," Bergeron said. "Most people don't sell in a down market."
Disregarding new construction, overall taxable value in Miami-Dade went down for the first time since Hurricane Andrew caused billions in damage in 1992, property appraiser Marcus Saiz de la Mora said.
But the county's overall 2 percent decrease in taxable value is not reflected in commercial tax values, which rose 5.4 percent.
If property owners feel their assessed value is too high, they can try to convince the property appraiser's office to change it or file a petition for a hearing before the county's value adjustment board. The five-member, state-mandated board sits as the impartial judge of value based on evidence provided by the taxpayer and the property appraisers. In South Florida, special magistrates hear cases.
Steve Letson, assistant director for commercial appraisal services for the Palm Beach County Property Appraiser, said a property could be appraised at a lower value than the purchase price. The owner could prove that it overpaid for the property because it's not earning as much as originally thought or the comparable sales haven't met that level, he said. In some cases, speculative purchasing drove up prices, but didn't reflect real market values, Letson said.
Complicating matters somewhat, he said, are private appraisers. They get called in to verify sale prices and loan amounts when transactions take place. So, a year after a property owner had an appraiser justify buying a $50 million building for approval on a $40 million loan, the owner could hire an appraiser to argue that the property is actually worth $38 million.
Letson said private appraisers sometimes make assumptions, such as expecting higher rental rates or that certain tenants will move in.
"There is always going to be a gray area," he said. "It sometimes comes down to ethics. We've had some people come in here and, unfortunately, completely ignore proper appraisal protocol and make an argument before the value adjustment board. Sometimes, they can convince our magistrates to go along with it and, sometimes, they can't."
Cancer Treatment Centers and Proton Therapy:
By Brian Bandell
With proton beams as the latest weapon against cancer, a medical arms race is under way.
Planning to build two proton therapy centers in South Florida, a company led by an oncology veteran plans to build one at the University of Miami’s medical campus.
That move could lead to South Florida having four of the incredibly expensive – but precisely accurate – cancer-blasting machines. Right now, there are only five proton therapy centers in the U.S., although a medical trade publication indicates at least 10 more are being planned.
The South Florida Proton Center plans to build proton therapy centers – at a cost between $85 million and $100 million apiece – at UM and in northern Palm Beach County, where it is looking for a site, said Dr. James Schwade, its executive director. Each center one would employ 40 to 50 people.
Schwade also heads the CyberKnife Center of Miami, which launched the first center for that cancer treatment device in South Florida and operates another in Palm Beach Gardens. He is the former chairman of the National Association for Proton Therapy.
“A lot of patients receiving proton therapy will be able to be treated with higher doses more effectively because there will be less of a dose delivered to healthy tissue than in conventional radiation therapy,” Schwade said.
In many cases, proton therapy is safer than using the standard linear accelerator because the proton beam can be aimed more accurately – stopping inside the tumor, instead of passing through the body. It leaves little residual radiation. Schwade said it is best for cancers of the brain, spine, head, neck, bone and soft tissue. Some proton therapy centers use it for prostate cancer, but Schwade isn’t convinced the treatment is better than conventional therapy in those cases.
Schwade hopes to find more uses for proton therapy by opening the Proton Center’s machines up to community physicians, as well as UM clinical staff and researchers. His company signed a letter of intent with UM to lease space for its proton therapy center in the life science park the university has planned for its medical campus. Schwade said he would need at least 60,000 square feet.
The agreement would make UM one of a select number of educational institutions with a proton therapy center in its arsenal of cancer treatments. The university’s physics team would help run the device, which would belong to and be funded by the Proton Center. “This will serve our patients and also potentially help with our discovery mission and lab work,” said Dr. Bart Chernow, VP for special programs and resource strategy at UM’s Miller School of Medicine. “UM physicians would have the opportunity to work there and help to provide medical leadership.”
The timeline for development in Miami depends on when UM can build its life science park, which is planned to be 2 million square feet. The university is working with its legal team to find the right development application process to proceed with, Chernow said.
Meanwhile, the Proton Center is scouting sites in northern Palm Beach County for its other facility, which it wants to open in 2011. Schwade said he wants a site of at least two acres near a major highway.
This facility also would be open to community physicians. Schwade believes it could help researchers at Scripps Florida and the Max Planck Society in Jupiter.
“Proton therapy really isn’t accessible to large numbers of doctors, and a lot of patients who needed radiosurgery aren’t getting them,” Schwade said. “By making these facilities available to the maximum number of physicians, more patients can access the technology.”