CITYWIDE

NYC OFFICE VACANCY RATE HITS LOWEST LEVEL SINCE MARCH 2002

Manhattan’s commercial real estate vacancy rate hit its lowest level since March 2002, according to a new study. The Trammel Crow Co. midyear report, which is expected to be released later this week, showed the vacancy rate slipped for the fifth consecutive month to 12.8% at the end of June – its lowest level in 27 months. The vacancy rate was down from 13.4% in the first quarter and 14.2% a year ago. Leasing activity in Midtown Manhattan accounted for much of the vacancy drop-off, the report said. “Leading the way, financial services companies’ demand for large blocks of space” helped drive demand, it said. Rents averaged $40.97 per square foot in the second quarter, up 1.5% from $40.38 in the first quarter and up 10% from $37.19 a year ago. “Second-quarter numbers show the Manhattan real estate market is out of the woods, but a full recovery is likely to be slow and labored,” the report said.

– Dow Jones Newswires

TOMMY HILFIGER TO RELOCATE NYC FACILITIES TO ONE LOCATION

Tommy Hilfiger Corp. will consolidate its New York operations and eliminate one of four distribution centers in New Jersey. As first mentioned in an August 4 press release, the efforts will result in non-recurring charges of about $4 million, or 3 cents a share, for the rest of the year. The efforts also require additional capital expenditures of $10 million to $15 million for the year. Beginning in fiscal 2006, however, the company expects costs to be mitigated through the facility elimination, with the net result having no impact on pretax income. In a press release yesterday, Tommy Hilfiger said its employee base was, at one point, housed in four locations. The company will sell one of its buildings and lease about 200,000 square feet of space in another. Completion of the building sale and relocation is expected to take place around March 31, 2005. The closing of the New Jersey distribution center is expected around September 30 of this year.

– Dow Jones Newswires

NATIONAL

AD SPENDING RISES 6.4%

Spending on advertising in America rose 6.4% in the first half of the year to $49.6 billion, lifted by increased political advertising and a rise in demand from traditional advertisers such as DaimlerChrysler AG and Procter & Gamble Co., preliminary data from Nielsen Monitor-Plus show. The top 10 advertisers spent $8 billion on advertising this year through June, an 11.3% increase from the same period a year ago, according to Nielsen, a unit of Nielsen Media Research. DaimlerChrysler, the third-largest spender listed by Nielsen, had the biggest percentage gain, with its advertising surging nearly 56% to $887 million, fueled by marketing for trucks such as Dodge Ram and Jeep Cherokee, the Nielsen report said. Driven by ads for trucks such as the Infinity FX and Nissan Pathfinder Armada, Nissan Motor Co. had the second-biggest percentage gain, with spending increasing more than 21% to $545 million. Procter & Gamble, the biggest spender, boosted its advertising by nearly 11% to $1.5 billion, while no. 2, General Motors Corp., spent $1.2 billion, up 7.7%. Spending for the 10 largest advertising categories rose 5% to nearly $19 billion. Prescription drugs, up 35% to $2.2 billion, had the biggest percentage increase among the ad categories. In anticipation of the presidential election, 356,161 political commercials have aired on spot television in the first six months of this year. The bulk of the ads were placed by the Bush and Kerry campaigns, but independent interest groups, such as MoveOn.org, also were big advertisers.

– Dow Jones Newswires

UAL AGREES TO APPOINT PENSION TRUSTEE

UAL Corp.’s United Airlines agreed to appoint an independent trustee to protect the interests of participants and beneficiaries of the carrier’s pension plans, the U.S. Labor Department said. The trustee, to be chosen by the Chicago-based company with the department’s approval, will review funding, assert claims, and file lawsuits if necessary on behalf of the plans, the department said in a statement. The trustee must be in place before September 15, when a $400 million payment is due, the department said. UAL, the world’s second-largest airline company, plans to skip about $575 million in pension contributions this year and an unspecified amount next year to conserve cash to exit bankruptcy. The company’s board in June changed the structure for managing the plans by eliminating an administrative committee and appointing UAL as the sole trustee, the department said. “It was clear they had such a stark conflict of interest that the company could no longer represent the workers in the plan,” said Ann L. Combs, assistant secretary of labor for the Employee Benefits Security Administration. The department “quite often” seeks trustee appointments at companies where such conflicts clearly exist, Combs said. For example, the department sought a trustee for Enron Corp. plans, she said. A United spokeswoman didn’t immediately return a telephone call to comment. United on July 14 deferred $72.4 million in pension-plan contributions due that month, and has $404.2 million due on September 15 and $91.2 million due on October 15.The company sponsors four major pension plans covering almost 120,000 employees, the Labor Department said.

– Bloomberg News

HOME DEPOT PROFIT GAINS 19%; ANNUAL FORECAST RAISED

Home Depot Inc. said second-quarter earnings climbed 19%, more than analysts’ estimates, helped by appliance sales and home installation services. The company boosted its annual forecast.

Net income rose to $1.55 billion, or 70 cents a share, from $1.3 billion, or 56 cents, a year earlier, the Atlanta-based company said in a statement. Revenue at the world’s largest home-improvement chain increased 11% to $20 billion in the quarter ended August 1.

Chief Executive Robert Nardelli narrowed the gap in sales growth with Lowe’s Cos. by adding more profitable appliances, such as Skybox beverage dispensers, and increasing installations of kitchen cabinets. New merchandise helped raise the size of the average purchase 8.2% to a record $54.73.

“The top line was quite impressive,” said Nancy Aversa, an analyst with Victory Capital Management in Cleveland, which owns 7.6 million shares of Home Depot. “They are very focused on driving average ticket. Some of the merchandising adjustments they have made have started to take hold.” The company said annual profit will rise as much as 17%, compared with its 14% forecast in May. Earnings last quarter were 6 cents more than the 64-cent average of 24 analysts surveyed by Thomson Financial. Sales at stores open at least a year increased 4.8%, compared with a 5.1% for no. 2 Lowe’s. Lowe’s gains have exceeded Home Depot’s for nine of the past 10 quarters partly because its new stores are less likely to cannibalize existing locations. The company’s shares rose $1.12 to $35.10 at 4 p.m. in New York Stock Exchange composite trading. Home Depot shares had risen 1.3% in the past year, compared with a 0.5% gain for Lowe’s.

– Bloomberg News

REGULATORY

SEC SEEN LIKELY TO APPROVE FUND MANAGER DISCLOSURE RULES

Fund managers such as Pimco’s Bill Gross and Fidelity Magellan’s Robert Stansky would have to disclose investments in their own company’s funds under rules expected to win approval today. The disclosure is part of a portfolio manager rule to be voted on by the Securities and Exchange Commission. Besides revealing their own holdings, fund managers would also have to disclose how their compensation is determined. “The issue here is, are their incentives aligned with yours?” said Mercer Bullard, a securities law professor in Mississippi and a former attorney in the SEt. “Are they eating what they are cooking?” While the fund industry’s trade group supports the rule, SEC staff has gotten an earful from people who say that the rules go too far. On August 3, Wellington Management Company LP portfolio manager Matt Megargel complained to SEC attorneys that the rule risked forcing many Wellington colleagues to reveal most of their net worth, since the Boston fund company restricts trading by portfolio managers of individual stocks, SEC records show. Some investors say the SEC hasn’t gone far enough. John Bogle, who founded Vanguard in 1974 but is no longer an officer at the mutual fund, says the SEC should require funds to reveal how much their portfolio managers are paid, including his or her share of the fund company’s profits.

– Dow Jones Newswires