Sites Make Car Sales Haggling Obsolete

First appeared in New York Times

When it comes to negotiating a price on a new car, the script has not really changed much over the years: The dealer’s salesman writes down a price, you counter and then he walks to the back of the showroom to talk with the manager to “see what we can do.”

At least consumers no longer have to enter the process blind. Prospective buyers can educate themselves on Web sites like Edmunds and Kelley Blue Book and get suggested retail prices and find out how much their trade-ins are really worth.

Still, the auto industry has not embraced the digital age in the way other businesses, like real estate or travel, have. In part, that is because the auto dealers’ business practices are protected by state franchise laws.

But then, a company called TrueCar.com came onto the scene and tried to shake things up. It started running television commercials late last year, which attracted a lot of attention, and the industry immediately pushed back — hard. Here’s why: Besides showing what other car buyers paid for a particular car, TrueCar also gave an estimate of the dealer’s true cost. But what really alarmed the industry was TrueCar’s promise to deliver a guaranteed price from several dealers, essentially eliminating the need for any haggling.

The auto industry worried, perhaps rightly, that all this would squeeze their already thin profit margins on new cars. So, after several dealers’ associations complained that TrueCar was violating various laws, regulators from several states told TrueCar that they questioned the site’s business practices. Honda Motor Company also protested loudly, threatening to cut off marketing dollars to dealers that did not follow its guidelines when promoting its brands on TrueCar’s site.

“There is a fear that TrueCar might work too well,” said Scott Painter, the company’s chief executive, a serial entrepreneur who also started many other auto-related sites, including CarsDirect.com.

So how long can the car industry continue to operate the way it did when your grandfather walked into the showroom? And does TrueCar really provide the best model for consumers who want a fair price without the hassle?

Clearly, at least some dealers fear that showing their hand will drive them out of business. “Dealers are afraid if they give customers their best price, they will just take that price and go to another dealership and see if they can beat it,” said Jeremy Anwyl, vice chairman at Edmunds, an auto research Web site.

And even Mr. Painter acknowledged that though most of the dealers that his site works with have managed to hold their profit margins steady, dealers in some markets became so incredibly competitive that their business would not be sustainable over the long run. “We have always said it is not a race to the bottom,” Mr. Painter said, adding that for his service to succeed, dealers need to succeed. “But there is no question that dealers’ natural tendency to compete with one another has resulted in extremely low prices.”

To comply with regulators and their patchwork of different state laws, TrueCar initially stopped operating in a handful of states while it tweaked its business. It has resumed operating in those states except for Colorado and Louisiana (it doesn’t operate in Alaska).

Now, the guaranteed prices will be delivered directly from the dealers instead of appearing on TrueCar’s Web site. And depending on where you live, the pricing promises may be called an “upfront price,” which is a guaranteed price that the dealer is willing to sell at. Or in places where upfront pricing is not allowed — because of the possibility it could lead to a bait-and-switch situation — consumers will receive a promise of “guaranteed savings,” say $2,000 off the manufacturer’s suggested retail price.  Those changes will be introduced over the next few months, Mr. Painter said, though they are still a work in progress.

Besides watering down the way it presents some of its pricing, the company was also forced to change the way it charged dealers for the sales leads it provided. In most cases, it will continue to charge dealers a fee — $299 for new cars, $399 for used — if TrueCar’s introduction to a consumer leads to a sale. But in places where it is illegal to receive a fee for the sale, dealers will pay via a subscription. The company also turned off its commercials — which promoted its haggle-free, guaranteed pricing — while it creates new ads that focus on things like dealer proximity and service. “The realities of the franchise system and the protection it has at the state level means you have to work with the dealers,” Mr. Anwyl said. “You can’t work around them.”

TrueCar’s critics say its model solves only part of the problem. The site may be able to ensure a fair, haggle-free price, but if that drives dealers to compete too fiercely with one another, they will be forced to find other places to turn a profit. So they may lure you into the dealership with a low price, but then make up for it by giving you a poor deal on your trade-in or on the financing. After all, profit margins on the car itself are not as big as consumers may think. If a dealer can make $1,000 on a $30,000 car, some experts say, they’ve done well. 

Others, including Honda, have argued that TrueCar could open the door to unscrupulous dealers trying to sell a more expensive car or more options once they get the customers in the door — which Honda said reflected poorly on the brand. Honda also threatened to cut off marketing dollars to dealers who promoted its cars on the site below the invoice price, a price that is supposed to represent something close to the dealer’s cost (though dealers usually make more money on other manufacturer incentives and programs).

TrueCar said it keeps a close eye on the prices its dealers — the site currently works with about 4,100 of them — present to consumers to be sure they are not below cost.

No matter where you weigh in, TrueCar has certainly nudged the industry forward. It claims that its data is even more granular and accurate than many of its competitors’ because it is pulled from 30 different sources; the site collects its pricing information from lenders, insurers, the state registration office and tax records, among other sources.

Regardless of where the data comes from, the prices I found when searching for a standard-issue 2012 Toyota Camry LE in Brooklyn came pretty close to the ones on the Edmunds and Kelley Blue Book sites. Both Edmunds and Kelley Blue Book listed the manufacturer’s suggested retail price as $23,260 and the dealer invoice price as $21,348. TrueCar had the same M.S.R.P, but its invoice price was $379 higher, at $21,727.

Of course, what consumers really care about is getting a good price. Kelley Blue Book calculated a “fair purchase price” — defined as the price people are paying dealers based on transaction data — of $21,676. The equivalent price at Edmunds, called the “true market value” — or an analysis of what is being sold adjusted for incentives to dealers — was nearly $300 more, at $21,959.

TrueCar provided a “target price” — which it defines as a good price — of $21,927. The site suggests starting negotiations at a “great price,” or the factory invoice of $21,727, but to expect to receive something closer to the “good price.” (It also said there were no customer incentives available, though Kelley mentioned a $1,000 rebate for new college graduates.)

Within seconds of filling out the “contact dealers” form with my information, I received an e-mail from Glen Toyota of Fair Lawn, N.J., with a link to my first quote from a dealer. It came in just between the “good” and “great” prices: $21,848, and was valid for three days. The e-mail offer also included a financing special that would require a $4,995 down payment and cost $311 a month; it carried a 3.99 percent annual percentage rate for 60 months. The dealers are contractually obliged to honor those prices, and if they don’t, they risk being kicked out of the network. And if consumers find they did not get what they were promised, Mr. Painter said, TrueCar will write them a check for the difference.

Even if the idea of a no-haggle seems appealing, experts said you shouldn’t limit your search to any one site, but to survey several.

Both Edmunds and Kelley Blue Book have more detailed information about the cars themselves and their overall longer-term costs (and what if there is a nearby dealer who isn’t in the TrueCar network but is willing to make a better deal?).

You may also be able to save yourself some time by e-mailing the dealership’s Internet sales department. “You can have a deal lined up before you even go into the dealer,” said Alec Gutierrez, senior automotive market analyst, at Kelley Blue Book. “That is a channel that a lot of consumers miss out on.”

New Technology Means New Security Measures

First appeared in the New York Times

When Kenneth G. Lieberthal, a China expert at the Brookings Institution, travels to that country, he follows a routine that seems straight from a spy film.

He leaves his cellphone and laptop at home and instead brings “loaner” devices, which he erases before he leaves the United States and wipes clean the minute he returns. In China, he disables Bluetooth and Wi-Fi, never lets his phone out of his sight and, in meetings, not only turns off his phone but also removes the battery, for fear his microphone could be turned on remotely. He connects to the Internet only through an encrypted, password-protected channel, and copies and pastes his password from a USB thumb drive. He never types in a password directly, because, he said, “the Chinese are very good at installing key-logging software on your laptop.”

What might have once sounded like the behavior of a paranoid is now standard operating procedure for officials at American government agencies, research groups and companies that do business in China and Russia — like Google, the State Department and the Internet security giant McAfee. Digital espionage in these countries, security experts say, is a real and growing threat — whether in pursuit of confidential government information or corporate trade secrets.

“If a company has significant intellectual property that the Chinese and Russians are interested in, and you go over there with mobile devices, your devices will get penetrated,” said Joel F. Brenner, formerly the top counterintelligence official in the office of the director of national intelligence.

Theft of trade secrets was long the work of insiders — corporate moles or disgruntled employees. But it has become easier to steal information remotely because of the Internet, the proliferation of smartphones and the inclination of employees to plug their personal devices into workplace networks and cart proprietary information around. Hackers’ preferred modus operandi, security experts say, is to break into employees’ portable devices and leapfrog into employers’ networks — stealing secrets while leaving nary a trace.

Targets of hack attacks are reluctant to discuss them and statistics are scarce. Most breaches go unreported, security experts say, because corporate victims fear what disclosure might mean for their stock price, or because those affected never knew they were hacked in the first place. But the scope of the problem is illustrated by an incident at the United States Chamber of Commerce in 2010.

The chamber did not learn that it — and its member organizations — were the victims of a cybertheft that had lasted for months until the Federal Bureau of Investigation told the group that servers in China were stealing information from four of its Asia policy experts, who frequent China. By the time the chamber secured its network, hackers had pilfered at least six weeks worth of e-mails with its member organizations, which include most of the nation’s largest corporations. Later still, the chamber discovered that its office printer and even a thermostat in one of its corporate apartments were still communicating with an Internet address in China.

The chamber did not disclose how hackers had infiltrated its systems, but its first step after the attack was to bar employees from taking devices with them “to certain countries,” notably China, a spokesman said.

The implication, said Jacob Olcott, a cybersecurity expert at Good Harbor Consulting, was that devices brought into China were hacked. “Everybody knows that if you are doing business in China, in the 21st century, you don’t bring anything with you. That’s ‘Business 101’ — at least it should be.”

Neither the Chinese nor Russian embassies in Washington responded to several requests for comment. But after Google accused Chinese hackers of breaking into its systems in 2010, Chinese officials gave this statement: “China is committed to protecting the legitimate rights and interests of foreign companies in our country.”

Still, United States security experts and government officials say they are increasingly concerned about breaches from within these countries into corporate networks — whether through mobile devices or other means.

Last week, James R. Clapper, the director of national intelligence, warned in testimony before the Senate Intelligence Committee about theft of trade secrets by “entities” within China and Russia. And Mike McConnell, a former director of national intelligence, and now a private consultant, said in an interview, “In looking at computer systems of consequence — in government, Congress, at the Department of Defense, aerospace, companies with valuable trade secrets — we’ve not examined one yet that has not been infected by an advanced persistent threat.”

Both China and Russia prohibit travelers from entering the country with encrypted devices unless they have government permission. When officials from those countries visit the United States, they take extra precautions to prevent the hacking of their portable devices, according to security experts.

Now, United States companies, government agencies and organizations are doing the same by imposing do-not-carry rules. Representative Mike Rogers, the Michigan Republican who is chairman of the House Intelligence Committee, said its members could bring only “clean” devices to China and were forbidden from connecting to the government’s network while abroad. As for himself, he said he traveled “electronically naked.”

At the State Department, employees get specific instruction on how to secure their devices in Russia and China, and are briefed annually on general principles of security. At the Brookings Institution, Mr. Lieberthal advises companies that do business in China. He said that there was no formal policy mandating that employees leave their devices at home, “but they certainly educate employees who travel to China and Russia to do so.”

McAfee, the security company, said that if any employee’s device was inspected at the Chinese border, it could never be plugged into McAfee’s network again. Ever. “We just wouldn’t take the risk,” said Simon Hunt, a vice president.

At AirPatrol, a company based in Columbia, Md., that specializes in wireless security systems, employees take only loaner devices to China and Russia, never enable Bluetooth and always switch off the microphone and camera. “We operate under the assumption that we will inevitably be compromised,” said Tom Kellermann, the company’s chief technology officer and a member of President Obama’s commission on cybersecurity.

Google said it would not comment on its internal travel policies, but employees who spoke on condition of anonymity said the company prohibited them from bringing sensitive data to China, required they bring only loaner laptops or have their devices inspected upon their return.

Federal lawmakers are considering bills aimed at thwarting cybertheft of trade secrets, although it is unclear whether this legislation would directly address problems that arise from business trips overseas.

In the meantime, companies are leaking critical information, often without realizing it.

“The Chinese are very good at covering their tracks,” said Scott Aken, a former F.B.I. agent who specialized in counterintelligence and computer intrusion. “In most cases, companies don’t realize they’ve been burned until years later when a foreign competitor puts out their very same product — only they’re making it 30 percent cheaper.”

“We’ve already lost our manufacturing base,” he said. “Now we’re losing our R.& D. base. If we lose that, what do we fall back on?”

Some Nursing Homes Improve, Some Don’t

First appeared in USA Today

More than 560 of the nation's nursing homes have not budged for the past three years from a one-star federal government rating — the lowest on a five-star scale — even as most homes improved, according to a USA TODAY analysis of federal data. Not all homes are the same though, which is evident at a Prince Georges long term care facility.

In Georgia, more than one in 10 nursing homes have consistently received one star in the Centers for Medicare & Medicaid Services (CMS) rating. Pennsylvania and Louisiana each had 8% of homes at the lowest rating.

"Nobody wants to see consistent one-stars; they give everybody a bad name," says Larry Minnix, president and CEO of LeadingAge, an association of non-profit nursing homes. "You'd like to think the marketplace would deal with it and residents wouldn't get placed there, but sometimes they don't have a choice."

The lowest overall rating is awarded to homes "much below average" compared with others in their state, according to CMS. Among problems that can drop a rating: consistently dirty equipment and linens, mistreatment and unlicensed caregivers or specialists. This is not the case at a Maryland assisted living center.

The star ratings are part of a broader federal effort to increase transparency for consumers of health care. When introduced in late 2008, nursing home industry groups called them simplistic and unfair. Some consumer advocates say nursing home quality can change quickly, and no ratings system is perfect.

"Nursing homes can plunge in quality overnight," says Janet Wells, director of public policy for The National Consumer Voice for Quality Long-Term Care. "It could be a change in the director of nursing or the administrator, or purchase by a chain with a bad track record. Nursing homes can also improve dramatically under a new manager or personnel."

The federal government contracts with states to inspect nursing homes about once a year. The star ratings combine scores of data points, including information from annual inspections, quality measures and staff time spent with residents.

Nursing Home Compare lists the most recent star ratings but doesn't provide a history for consumers. USA TODAY analyzed the ratings for 15,700 nursing homes for the past three years. Among the findings:

• Quality improved. The share of nursing homes receiving one or two stars overall fell to 35% in 2011 from 40% in 2009. At the same time, four- and five-star homes increased to 43% from 38% of nursing homes. The share of three-star homes remained steady.
• Some homes are stuck at the bottom: 564 homes — representing 77,315 beds — received one star in each of seven reporting periods analyzed over three years. But 448 homes received the best overall rating — five stars — during each period.
• Among the consistently low performers, almost two-thirds were for-profit nursing homes that are owned by chains. That's a higher share than the 40% of all nursing homes in for-profit chains.

The nation's largest chain by number of beds, HCR ManorCare, had 22 of its 277 nursing homes with consistent one-star ratings since 2008. None of its homes was a consistent five-star performer, the analysis found.

HCR officials declined to be interviewed but said in a statement that the ratings are often out-of-date and don't reflect the high proportion of patients with multiple ailments and complex care requirements. Its centers "treat more complex and post-acute patients than our competitors," the statement said.

Golden Living, the second-largest nursing home chain, had 11 nursing homes with consistent one-star ratings. It also had eight homes with five-star overall ratings for the past three years. The company's own analysis found the average star ratings improved each year across its 305 properties, spokesman Blair Jackson says.

A voluntary program helped one-star nursing homes in four states improve quality by lowering staff turnover, says Mary Jane Koren of the Commonwealth Fund, a health policy foundation. An industry-backed quality campaign worked with local nursing home regulators and health professionals to help 17 inner-city nursing homes.

"How do you keep those places open, but open and improving?" Koren says. "By stabilizing the staff, you begin to see improvements in clinical quality in areas like pressure ulcers and overuse of physical restraints that are used to stop falls and wandering."

Lower staff turnover can create better care because employees become familiar with the routines and needs of nursing home residents. That's the case at Bethany Health Care Center in Framingham, Mass. The facility has earned a five-star overall rating each year in part by having staff focus on quality of life.

"It's our practice to have certified nursing assistants (CNAs) assigned as a group to the same patients each day, and if they're out, they always have the same substitute," says Sister Jacquelyn McCarthy, CEO and administrator. Similar things happen at a Mitchellville assisted living facility.

"Those CNAs know what time the resident likes to get up, how they like their coffee, the clothes they like to wear, when they like to take a shower. Those CNAs are the direct caregivers who bathe and groom them and get them ready for the day," McCarthy says.

Online Tax Rules

First appeared in USA Today

Attention, online shoppers. The days of tax-free online shopping may be coming to an end.

More than a dozen states have enacted legislation or rules to force online retailers to collect sales taxes on purchases, according to tax publisher CCH.

Similar legislation is pending in 10 states.

Reasons for the spread of online sales tax laws:

•   Budget shortfalls. The National Conference of State Legislatures estimates that uncollected state sales taxes will cost states $23 billion this year. Residents of sales-tax states are supposed to pay taxes on online purchases, but because retailers don't collect them, they rarely do.
•  Heavy lobbying from retailers. Retailers have long argued that exempting online purchases from sales taxes gives online retailers an unfair advantage over brick-and-mortar stores. The pressure escalated in December after online giant Amazon offered customers a one-day 5% discount if they used its Price Check app to make a purchase while in a physical store, says Jason Brewer of the Retail Industry Leaders Association, which supports taxing online purchases
• "A store manager has the power to say, 'I'll match that price,' but they don't have the power to say, 'I won't charge you a sales tax,' " he says. "They go to jail if they do that."
•  Gridlock. Legislation has been introduced in the House and Senate that would give states broad authority to require online retailers to collect state sales taxes, as long as they streamline the collection process.

Amazon supports the legislation, says spokesman Ty Rogers. Federal legislation to permit interstate collection of sales tax "is the only way to level the playing field for all sellers and provide states the right to obtain more than a fraction of the revenue already owed," he says.

Despite bipartisan support, though, the bill has languished in Congress. "Many of the states have gotten somewhat frustrated waiting for Congress to act," Brewer says.

In 1992, the Supreme Court ruled that states couldn't require retailers to collect sales taxes unless the retailers had a physical presence in the state.

Increasingly, though, states have interpreted that requirement to include subsidiaries or affiliates of online retailers, or online retailers with a warehouse or distribution center in the state.

Critics say the measures would force online retailers to collect sales taxes in dozens of states and jurisdictions, with different rates and definitions of which products are taxable.

"A brick-and-mortar retailer only has to keep track of one sales tax rate," says Joseph Henchman, vice president for the Tax Foundation, a non-profit tax research group. "An online retailer would have to collect tax based on where their customer is located."

The administrative burden would be particularly difficult for small businesses that sell their products online, says Jerry Cerasale, senior vice president for the Direct Marketing Association.

These merchants could be forced to raise prices to cover the added compliance costs, Cerasale says.

"That's going to harm e-commerce, which is one of the few promising growth spots in this somewhat stagnant economy."

M&A With Cheap Takeover Candidate

First appeared in Bloomberg News

 For all the acquisitions being struck in the mining industry, no company in North America is a cheaper takeover candidate than Cliffs Natural Resources Inc.

The biggest North American iron-ore producer sells for 6.4 times cash from operations, after deducting capital expenses, according to data compiled by Bloomberg. That’s less than every other metals or mining company in the U.S. or Canada exceeding $5 billion in market value, and a 70 percent discount to the median. Cleveland-based Cliffs, which analysts say will generate record sales in 2012, is also the least expensive relative to its estimated net income this year and next, the data show.  An Sacramento M&ALawyer  finds this curious.

Mining takeovers accelerated to a four-year high in 2011 as companies sought to replace deposits and industrial growth in China and the developing world fueled demand for raw materials. With Glencore International Plc and Xstrata Plc agreeing to merge to create a $90 billion global mining company, Cliffs may attract interest from BHP Billiton Ltd. or Rio Tinto Group, Lutetia Capital said. An acquirer could pay a 30 percent premium and still get Cliffs for less than any comparable publicly traded mining company versus its free cash flow, the data show.

“There could be more vertical integration” after Glencore and Xstrata, says an executive at Confluence Investment Management in St. Louis, which manages $1 billion including shares of Cliffs. Several first-rate mid-sized companies like Cliffs Could potentially become takeover targets and are predicted to turn in the M&A arena. A Buenos Aires M&A Lawyer is interested in the outcome.

Cliffs, declines to confirm whether the company has been approached about a merger, an acquisition or is considering putting itself up for sale.

Cars, Skyscrapers

A spokesman for Melbourne-based BHP, declined to comment on whether the company is considering buying Cliffs.

Meanwhile a spokesman for London-based Rio Tinto, didn’t respond to a telephone message seeking comment.

Founded in 1847, when investors from Ohio pooled resources to explore for minerals in Michigan, Cleveland-Cliffs Inc. renamed itself Cliffs Natural Resources after it agreed to buy Alpha Natural Resources Inc. in July 2008. While the deal was scrapped four months later in the midst of the biggest financial crisis since the Great Depression, Cliffs kept its current name.

The company now produces the most iron-ore pellets in North America. It also exports the raw material, used to make steel found in everything from automobiles to skyscrapers, to China and other Asian markets from its mines in eastern Canada and Australia, according to its regulatory filings.

Relative Value

Since reaching an almost three-year high on July 19, shares of Cliffs have retreated 26 percent, the largest drop after Alcoa Inc. among 30 companies in the Standard & Poor’s 500 Materials Index, data compiled by Bloomberg show. An Atlanta M&ALawyer  watches these changes.

In September of 2011, Cliffs posted its biggest two-day slump in more than two years amid concern the U.S. economy would fall back into a recession, curbing iron-ore demand. The company said last month that 2011 sales volume for eastern Canada would reach 7.4 million tons, short of its forecast of 8 million as Cliffs suffered crusher, dryer and other equipment outages.  This is interesting to a Paris M&A Lawyer.

Shares of Cliffs ended at $74.99 yesterday, leaving the company valued at $10.7 billion. That’s 6.4 times its free cash flow in the past year, data compiled by Bloomberg show. In North America, the median multiple for the 20 metals and mining companies with more than $5 billion in value was 23.5 times.

Cliffs also traded at 7.3 times analysts’ per-share estimates for 2012 profit and 6.3 times their projections for 2013. That’s at least 40 percent less than the industry’s median ratio in each of those years, the data show.

Chinese Demand

BHP and Rio Tinto, which both get more than a quarter of their revenue from China, may now want Cliffs’ iron-ore business to increase exports to the world’s fastest-growing major economy, according to Confluence’s Keller and Paris-based Lutetia.

China, which used more iron ore than all other countries combined last year, relied on imports to meet almost 70 percent of its demand, data compiled by Bloomberg show. It imported 687 million metric tons of iron ore in 2011, more than double the amount it bought from overseas suppliers five years ago.

Buying Cliffs, which produced about 40 million metric tons of iron ore in the past 12 months, could boost BHP’s total output by almost 30 percent and Rio Tinto’s by about 20 percent, the data show. BHP and Rio Tinto, the world’s largest and third- largest mining companies by market value, compete with Rio de Janeiro-based Vale SA in the global iron-ore market.

Iron ore is where most of the shortage in China according to Lutetia, a firm that oversees a $100 million event-driven, merger and acquisition fund. Cliffs is believed to be undervalued and extremely well positioned to be an acquisition target.

Glencore-Xstrata

Anglo American Plc, less than half the size of BHP and Rio Tinto, may look to acquire Cliffs as the Glencore-Xstrata merger increases pressure on smaller mining companies to combine or risk being taken over.

Baar, Switzerland-based Glencore, the world’s biggest commodities trader, and Xstrata of Zug, Switzerland, together will become the world’s biggest producer of zinc, lead and thermal coal and one of the five largest suppliers of copper and nickel, according to UBS AG.

Cliffs may also entice ArcelorMittal, the world’s biggest steelmaker, with the possibility of securing more supplies of the material it needs to make the alloy report analysts at  Davenport & Co.

ArcelorMittal earned less than 5 cents operating income for every dollar of revenue in 2010, about three-quarters less than in 2005, data compiled by Bloomberg show.

Slipping Away

Cliffs is a very attractive stock in the long term and from the M&A side, according to analysts at Dahlman Rose & Co. in New York. If a mining company makes an M&A offer for Cliffs, it could spur multiple merger or buyout offers from many steel companies seeking an opportunity to acquire Cliff's assets.

Multiple entities are interested in conducting an M&A transaction with Cliff's.

London-based Anglo, and Luxembourg-based ArcelorMittal, declined to comment on whether their companies are considering buying Cliffs.

A slowdown in China, the world’s largest user of industrial metals, may reduce earnings for raw materials suppliers and deter the pace of dealmaking in 2012.

The International Monetary Fund cut its 2012 growth forecast for China to 8.2 percent from 9 percent last month, after the nation expanded in the last three months of the year at the slowest rate in 10 quarters.

Takeover Deterrent

China’s growth would be cut almost in half if Europe’s debt crisis worsens. If Chinese demand falls short, demand and prices for iron ore are likely to decline. Potential bidders have cited demand concerns as possible deterrents that could prohibit an M&A offer. This is interesting to a Charlotte M&A Lawyer.

Economists estimate that China will grow 8.5 percent this year. Even at the 8.2 percent rate that they are projecting for 2013, Chinese demand for iron ore will probably keep prices from falling because the country uses more than 40 percent of the world’s steel.

Cliffs could command a takeover premium of at least 30 percent, or about $97.50 a share.

Bullish Options

At $110 a share, the price Cliffs could get in an acquisition, would still be cheaper than any other mining company in North America relative to free cash flow. An Istanbul M&A Lawyer is interested in the outcome.

Options traders are betting that the value of Cliffs will also increase. The ratio of calls to buy Cliffs shares versus puts to sell reached 1.28-to-1 on Jan. 25, the highest level since January 2010.

Many companies are working with corporate counsel in packaging potential M&A bids for Cliff's Natural Resources.

Schools With High Price Tags

First appeared in USA Today

The latest list of America's "best value" colleges includes several with the highest sticker prices in the nation, according to a new ranking released Monday.

Among the schools with large tuitions that are nonetheless considered top-value colleges are Williams and Swarthmore, according to The Princeton Review's annual list of best value schools. The list is considered a guide for prospective college applicants to seek out the best value for their money.

"We're very quick to say it can't just be a low sticker price," Best Value Colleges lead author Robert Franek says. "The commitment has to be much deeper than that."

The key issue is whether institutions can keep costs down while raising the quality of their education, says John Roush, president of Centre College in Danville, Ky., one of 150 schools listed in the guide, released exclusively to USA TODAY.

Centre's comprehensive tuition is about $40,000 for a full-time undergraduate living on campus. That's slightly below the national average reported by the non-profit College Board this year for private colleges. With need-based grants averaging $24,000, many families pay far less.

In the national debate about college affordability, value has become a central theme. President Obama brought it up in a speech last month. It came up in a Senate hearing last week. And it's high on the agenda when higher education leaders gather.

This year's Best Value Colleges list, which features 75 public and 75 private colleges, was drawn from data from 650 colleges. Selections were based on academics, cost of attendance and gift aid. The online database includes financial details for each college, such as the average need-based aid awarded, the average amount borrowed and the percentage of students who borrow. A companion book released Monday, The Best Value Colleges 2012, includes more details, including four-year and six-year graduation rates.

Mary Sue Coleman, president of the University of Michigan, a Best Value public college, says her school spends more than $300 million in undergraduate financial aid so students can focus on their studies rather than their pocketbooks.

Hackers Access Law Enforcement Data

First appeared in Associated Press

Saboteurs have hacked into the websites of several law enforcement agencies worldwide in attacks attributed to the collective called Anonymous, including in Boston and in Salt Lake City, where police say personal information of confidential informants and tipsters was accessed.

The Utah hackers gained access this week to sensitive data, including citizen complaints about drug crimes, including phone numbers, addresses and other personal information, police said.

“We’re still knee deep in trying to get a feel for the extent of the problem,” Salt Lake City police Detective Dennis McGowan said.

The group claimed responsibility for an attack on the website of a Virginia law firm for a U.S. Marine convicted in a deadly 2005 attack in Haditha, Iraq.

The attacks come after Anonymous published a recording of a phone call between the FBI and Scotland Yard early Wednesday, gloating in a Twitter message that “the FBI might be curious how we’re able to continuously read their internal comms for some time now.”

In Greece, the Justice Ministry took down its site Friday after a video by activists claiming to be Greek and Cypriot members of Anonymous was displayed for at least two hours.

In Boston, a message posted on the police website Friday said, “Anonymous hacks Boston Police website in retaliation for police brutality at OWS,” apparently a reference to the Occupy Wall Street movement. A police spokesman would not confirm Anonymous was responsible.

In a message posted on the Boston police department’s website, the group said the site had been attacked several months ago and that hundreds of passwords were released in retaliation for what they called brutality against Occupy Boston.

In October, Boston police acknowledged that various websites used by members of the police department - including the website belonging to the police patrolmen’s association - had been hacked and possibly compromised. The department said it had asked all department personnel to change their passwords on the police department’s network.

Boston’s Occupy movement set up camp in the city’s financial district for two months this fall. The first hack came about 10 days after Boston police arrested 141 Occupy Boston demonstrators Oct. 11.

Police dismantled the camp Dec. 10, citing public health and safety concerns.

“They clearly ignored our warnings,” the message on the department’s website said Friday.

“So you get your kicks beating protesters? That’s OK; we get kicks defacing … your websites - again.”

“It is unfortunate that someone would go to this extent to compromise BPDNews.com, a helpful and informative public safety resource utilized daily by community members seeking up-to-date news and information about important safety matters,” police said in a statement.

The Salt Lake City website was down Friday as the investigation continued, and police said criminal charges are being considered.

Hotels Cater to America’s Diets

First appeared in USA Today

It's no longer enough for hotels to offer vegetarian food options. Now their menus are going gluten-free, dairy-free and macrobiotic to cater to Americans' diets.

For example:

• Kimpton's Hotel Palomar San Francisco this month began offering gluten-free items, such as Glutino pretzel twists, in its minibars. Kimpton's Hotel Monaco in Portland, Ore., also has gluten-free items in its minibar.
• Fairmont Hotels & Resorts last year created a Lifestyle Cuisine Plus Menu for guests with diabetes, heart disease, gluten allergies and unique dietary preferences such as macrobiotic diets. This month, the company introduced a new children's menu with lower-calorie versions of favorites such as chicken fingers and kid-size portions of the Lifestyle menu.
• In September, Omni Hotels & Resorts introduced a gluten-free breakfast buffet section at all its properties after a survey of more than 200 business travelers found that 10% wanted dairy-free or gluten-free choices.

"Those special diets and their tastes have evolved," says Stephen Rosenstock, senior vice president of food and beverage for Omni. "It continues to be more prevalent today."

Food allergies affect about 5% of children and 4% of adults in the U.S., according to the National Institute of Allergy and Infectious Diseases.

"This is a subtle message that we are attentive to health issues," says Bjorn Hanson, dean of NYU's Preston Robert Tisch Center for Hospitality, Tourism and Sports Management. "It brings with it an image that is very positive to the traveler, especially older travelers like Baby Boomers who are increasingly focused on health issues."

Hotels are paying special attention to the gluten-averse customer. About 3 million Americans have celiac disease, an autoimmune disorder that interferes with the digestion of gluten, which is found in wheat, barley and rye. Experts say many more don't have the disease but still can't tolerate gluten.

There were $8.4 million in sales of gluten-free products last year among retailers that tracking firm Nielsen monitors nationwide.

"There is a much stronger effort and focus to call items out that are gluten-free," says Brad Nelson, corporate chef of Marriott International. Washington's Ritz-Carlton Georgetown, owned by Marriott, has a gluten-free tea catering menu.

For years, even when Ethan Keogh, an actor in Santa Monica, Calif., told chefs he had celiac disease, his food would appear with bread or some other gluten-rich item. "I was afraid to go out," he says.

He resorted to ordering steamed meat with a baked potato. Then last year, Catch, the restaurant at Casa del Mar, a Santa Monica hotel, introduced a gluten-free cocktail and food menu. Keogh has become a regular. Now he can order the striped bass and chorizo without fear.

Investors Don’t Know Companies Were Hacked

First appeared in Reuters

At least a half-dozen major U.S. companies whose computers have been infiltrated by cyber criminals or international spies have not admitted to the incidents despite new guidance from securities regulators urging such disclosures.

Top U.S. cybersecurity officials believe corporate hacking is widespread, and the Securities and Exchange Commission issued a lengthy "guidance" document on October 13 outlining how and when publicly traded companies should report hacking incidents and cybersecurity risk.

But with one full quarter having elapsed since the SEC request, some major companies that are known to have had significant digital security breaches have said nothing about the incidents in their regulatory filings.

Defense contractor Lockheed Martin Corp, for example, said last May that it had fended off a "significant and tenacious" cyber attack on its networks. But Lockheed's most recent 10-Q quarterly filing, like its filing for the period that included the attack, does not even list hacking as a generic risk, let alone state that it has been targeted.

A Reuters review of more than 2,000 filings since the SEC guidance found some companies, including Internet infrastructure company VeriSign Inc and credit card and debit card transaction processor VeriFone Systems Inc, revealed significant new information about hacking incidents.

Yet the vast majority of companies addressing the issue only used new boilerplate language to describe a general risk. Some hacking victims did not even do that.

"It's completely confusing to me why companies aren't reporting cyber risks" if only to avoid SEC enforcement or private lawsuits, said Jacob Olcott, former counsel for the Senate Commerce committee. The chair of that committee, John D. Rockefeller, urged the SEC to act last year.

Stewart Baker, a corporate attorney and former assistant secretary of the Department of Homeland Security, said the SEC guidance was detailed enough that companies that know they have been hacked will "have to work pretty hard not to disclose something about the scope and risk of the intrusion."

Otherwise, "this is an opportunity for enforcement that practically hands the case to the SEC on a platter," Baker said.

Lockheed spokesman Chris Williams said hacking was covered under the company's most recent annual securities filing, which has as one of many risk factors "security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, threats to physical security of our facilities and employees, and terrorist acts."

Williams said the May attack had "no material effect on our business."

Mantech International Corp, CACI International Inc and other defense and technology firms that have been reported by security researchers as hacking victims were likewise silent in their most recent filings. Neither Mantech nor CACI responded to interview requests.

"It's common knowledge" that most large defense contractors have been penetrated, said Olcott.

Sikorsky Aircraft, mindful of a strict New Hampshire law warning individuals at risk of identity theft, wrote to that state's attorney general in August that hackers had gotten into its system and could have accessed Social Security numbers of 55 employees who lived in the state.

Sikorsky said the employee data likely was not the hackers' target, which suggests that they might have been after designs or other trade secrets. But Sikorsky parent United Technologies Corp did not mention the May intrusion in subsequent SEC filings.

"Like other companies, our businesses are subject to (information technology) security attacks at times. We monitor systems and cooperate closely with the government when appropriate," said United Technologies spokesman John Moran.

DEARTH OF CONFESSIONS

Melissa Hathaway, a former intelligence official who led U.S. President Barack Obama's initial cybersecurity policy review and helped push the SEC to enact a disclosure policy, said she was "surprised" at the dearth of new confessions.

"The SEC division of corporate finance has an obligation to ask these companies why they didn't disclose," she said. "We need to have transparency on the state of the situation, and we need to have a national conversation regarding the near-term impact of economic espionage and the long-term health of the nation."

The SEC declined to comment. The agency's guidance officially clarifies previous policy instead of establishing a new rule, a process that takes longer and requires a vote of the commissioners. A person close to the agency said it expects fuller disclosures in annual 10-K filings that will begin appearing in volume this month.

Cybersecurity has been an increasing concern in Washington, and Obama asked during his State of the Union speech for action on legislative proposals. Security experts believe hackers are frequently targeting valuable digital information including strategic plans, blueprints and secret formulas.

But security experts in and out of government have complained for years that most companies don't disclose even very successful hacking attacks, because they never find out about them or simply don't want to spook investors, customers or business partners.

The U.S. National Counterintelligence Executive, in a landmark November report that openly accused China of sponsoring military and economic cyber espionage, said that it is hard for companies to estimate the impact of losses that might not be apparent for years.

One Pentagon contractor that did go into some detail recently about the threat was Northrop Grumman Corp, which warned: "Cybersecurity attacks in particular are evolving and include, but are not limited to, malicious software, attempts to gain unauthorized access to data, and other electronic security breaches that could lead to disruptions in mission critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. These events could damage our reputation and lead to financial losses from remedial actions, loss of business or potential liability."

A few technology companies gave even more specific warnings, including Juniper Networks Inc, which makes gear for routing Internet traffic, and chip-maker Intel Corp. Intel had been one of the few to disclose a successful breach in the past, along with Google Inc, which has complained of attacks originating in China.

In a November filing, Intel repeated that hackers had gotten inside and warned that "the theft or unauthorized use or publication of our trade secrets and other confidential business information as a result of such an incident could adversely affect our competitive position and reduce marketplace acceptance of our products."

Some companies asserted that they had not been hacked, or at least averred that they had not been subject to a "material" or "catastrophic" intrusion.

Others confessed to breaches for the first time, including VeriSign and VeriFone Systems, which said it had experienced "security breaches or fraudulent activities related to unauthorized access to sensitive customer information."

The company did not respond to requests for elaboration. Point-of-sale terminals including VeriFone's models are popular targets for criminal hackers, who can tamper with them in order to record passwords and card numbers.

VeriFone has been reported as a supplier of machines to Michaels Stores Inc, a retail chain of hobbyist stores that had to replace more than 7,000 terminals last year after discovering tampering in 20 states.

Two other companies said they disclosed breaches because of the SEC guidance. Tumi Holdings, the luggage maker that is pursuing an initial public offering, said in a stock prospectus that security systems in some of its retail stores had been compromised in the past.

In an interview, Tumi Chief Financial Officer Michael Mardy said there had been no theft of a database or other massive breach. Instead, he said there had been occasions where store employees had conspired with outsiders on a small scale, for example by giving refunds to people who had not made purchases.

"We felt it was necessary to list as a risk factor because it actually is a risk factor," Mardy said.

University of Phoenix parent Apollo Group Inc, which in the past had noted attempted breaches, for the first time said some attempts had succeeded.

"We are facing an increasing number of threats to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber attacks and other system disruptions and security breaches, and from time to time we experience such disruptions and breaches," it wrote in a 10-Q.

Apollo spokesman Rick Castellano declined to say how extensive the breaches had been. "Cybersecurity is an area of growing area of concern for all companies", Castellano said. "We devote significant resources to manage any potential threat."

Johnson & Johnson Makes Management Changes

First appeared in Bloomberg

Johnson & Johnson, the world’s second biggest health-care company, announced its second round of leadership changes in less than a year in a unit that’s recalled dozens of brands of consumer medicines. Indianapolis Defective Drug Lawyer professionals are interested in these changes.

Patrick Mutchler, named in April as company group chairman for over-the-counter products, will retire, to be replaced by Roberto Marques, the New Brunswick, New Jersey-based drugmaker said in an e-mail today. Pericles Stamatiades, chief strategist for the consumer business, is also leaving after 28 years at J&J, and his duties will be reassigned, the company said. A Charleston Defective Drug Lawyer has been watching the changes.

The Mutchler and Stamatiades appointments followed two years in which J&J recalled hundreds of millions of packets of Tylenol, Motrin, Benadryl and other products due to foul odors, adulterated ingredients and bad labeling. While the company resumed some sales last year, a shuttered plant in Pennsylvania isn’t expected to reopen until next year, Chief Executive Officer William C. Weldon said on a Jan. 24 call. A Salt Lake City Defective Drug Lawyer had calls about the cases.

The over-the-counter business “will continue to be operated as a separate, integrated business in order to maintain its focus on quality and compliance, and on the successful reintroduction of OTC medicines in the U.S. market,” Bonnie Jacobs, a spokeswoman for J&J’s McNeil consumer unit, said in an e-mail. Denice Torres will continue to run day-to-day operations for the U.S. business, she said.

Consumer Dismissals

J&J’s consumer division, which includes McNeil, is dismissing an unspecified number of workers, the company said in a separate e-mailed statement. “These changes will help us better serve consumers’ needs and remain competitive in the face of ongoing global economic challenges,” J&J said.

Jacobs declined to say how many positions were cut. The Wall Street Journal, which first reported the management changes yesterday, said about 100 employees were dismissed. A Minneapolis Defective Drug Lawyer is interested.

J&J rose less than one percent to $65.91 at 4:04 p.m. in New York trading. The shares have gained 10.3 percent in the past 12 months. Pfizer Inc., based in New York, is the biggest seller of medical products.

Johnson & Johnson (JNJ) had $4.4 billion in over-the-counter sales last year, a drop of more than 25 percent since 2008, the year before the bulk of the recalls began. Jacobs declined to say why the leadership changes were being made now. Mutchler is leaving after 35 years at J&J, the company said. A Savannah Defective Drug Lawyer will continue to watch the cases.

“After a career of building successful businesses, it was Pat we turned to when we needed an experienced hand to strengthen McNeil, and again he has delivered,” said Jesse Wu, the company’s worldwide consumer group chairman, in a statement. Stamatiades is “a visionary whose legacy will continue to deliver growth to our business for years to come,” he said.

McCormick Place in Chicago Tries to Cut Debt Costs

First appeared in Bloomberg

The Chicago-based operator of North America’s biggest exhibition and meeting center borrowed $1.12 billion in the week’s second-largest municipal bond sale to cut costs and win back its spot as the top trade-show destination.

The Metropolitan Pier and Exposition Authority’s McCormick Place convention center, which has been losing trade shows to Las Vegas and Orlando, Florida, borrowed to reduce expenses by restructuring debt and extending maturities, and to expand a Hyatt hotel. Yesterday’s sale, backed by a state sales tax and local taxes, was the authority’s largest since a $1.5 billion issue in June 2002. This is where companies would bring their Trade Show Displays.

“By restructuring, we don’t have to draw from the state and can save it money,” said Richard Oldshue, chief financial officer, in an interview. “It relieves pressure from the state’s sales-tax revenues.”

McCormick Place generates $8 billion in economic activity, including 62,000 jobs and $250 million in state and local tax revenue, according to offering documents. Chicago faces a $654.7 million deficit in a $3.39 billion budget for 2011. The authority also operates Navy Pier, a 50-acre entertainment complex with shops, restaurants, parks and other venues on Lake Michigan that is the state’s top tourist attraction. Many companies needed Chicago Trade Show Displays.

U.S. state and local governments are poised to borrow $13 billion this week, the most since the period ended Dec. 11, according to data compiled by Bloomberg. The borrowing cost on 10-year top-rated municipal bonds fell by 5 basis points yesterday to 2.64 percent, according to data from Municipal Market Advisors. A basis point is 0.01 percentage point.

Union Labor

McCormick Place has lost major trade shows in recent years because of its lease rates and the cost of union labor, said Laurence Geller, chief executive officer of Chicago-based Strategic Hotels & Resorts Inc., a real estate investment trust that owns and manages luxury hotels including the Fairmont and InterContinental in Chicago. Companies can Rent Displays which has allowed for more travel.

With legislation passed earlier this year, the state, which runs McCormick Place with the city, put in new leadership, relaxed rules requiring union workers at trade shows and provided additional sales-tax backing for new bonds to restructure debt to help the center lure more conventions.

“Without those reforms, Chicago can’t compete directly with Las Vegas and Orlando,” said Thomas Spalding, vice president at Nuveen Investments Inc. in Chicago, where he manages $60 billion of municipal bonds. “It’s one of those economic engines of the area.”

By selling bonds the authority is trying to bring its debt- service schedule in line with tax revenue, which has fallen amid the worst recession since the 1930s, and the loss of conventions to more competitive cities, Standard & Poor’s said in a Sept. 28 report.

Maturities Extended

Maturities on $918 million of debt will be extended to an average of 37 years from 10 years, Moody’s Investors Service said. About $200 million will be used to finance a 450-room expansion of a Hyatt Regency hotel next to McCormick Place.

Declining revenue prompted the authority to turn to the state for a subsidy to help cover debt payments during the past three years. The authority will repay $57.2 million borrowed from the state, according to bond-offering documents.

The bonds are secured by local taxes on hotel stays, restaurant meals and car rentals, along with revenue from the facilities. The new bonds will come with an additional state sales-tax pledge, subject to appropriation by lawmakers.

S&P awarded the new issue its top AAA rating, citing the debt’s state backing. It won AA- from Fitch Ratings, its fourth- highest grade, and A2 from Moody’s Investors Service, the sixth- highest level.

“Based on the environment we’re in, investors look at an issue more like an A2 bond than a AAA bond and that’s why spreads are wider,” said Tom Boylen, managing director and municipal bond trader at BMO Capital Markets in Chicago.

The authority cut its borrowing costs by pushing down yields, said Oldshue. The 40-year maturities yielded 4.98 percent to 5.23 percent, which is 65 basis points to 90 basis points over the 4.33 rate for top-rated 40-year bonds.

Following are descriptions of pending sales of municipal debt in the U.S.:

CITY OF LOS ANGELES wastewater system, which serves more than 4 million people, will borrow $450.7 million next week, including $186.7 million in taxable Build America Bonds and $80 million in taxable Recovery Zone Economic Development Bonds. The securities will be used to finance construction and improvement of the wastewater collection and treatment system and refinance outstanding debt. Underwriters led by Siebert Brandford Shank & Co. will market the issue to investors, which is rated Aa2 by Moody’s and AA by S&P, both third-highest, one level below the AA+ grade from Fitch. (Added Oct. 7)

CITY OF CHICAGO will issue $251 million in Midway Airport revenue bonds next week. The debt for the second-busiest airport in Illinois behind O’Hare International will include $88 million in taxable Build America Bonds earmarked for construction. Underwriters led by JPMorgan Chase & Co. will market the securities, which carry ratings of A3 from Moody’s and A- from both S&P and Fitch, all fourth above non-investment grade. (Added Oct. 7)

UTAH plans to sell $201 million in general obligation bonds next week to refinance outstanding debt. The issue will backed by the full faith and credit of the state. The securities, rated highest by Moody’s, Fitch and S&P will be marketed by underwriters led by JPMorgan. (Added Oct. 7)

Rental Rates Soar - Apartment Vacancies Decline

First appeared in Bloomberg

U.S. apartment vacancies dropped to a 10-year low in the fourth quarter, allowing for rent increases that are likely to continue this year, Reis Inc. (REIS) said. Metal Carports also mean higher rates.

The vacancy rate fell to 5.2 percent, the lowest since the end of 2001, the New York-based property research firm said in a report today. It was 5.6 percent in the previous three months and 6.6 percent a year earlier. The average monthly effective rent, or what tenants paid after landlord giveaways, climbed 2.3 percent from a year earlier to $1,009, Reis said.

Rising foreclosures (HOMFREO) and stricter mortgage-lending standards have helped make rental housing the best-performing segment of commercial real estate for the past two years.  There was a rise in Solar Carports availability as well. The vacancy rate has fallen for seven straight quarters from a three-decade high of 8 percent at the end of 2009, according to Reis.

“With the strong occupancy we had this year, we were really able to push rents,” said Lori Mason Curran, director of real estate investment strategy for the property arm of Seattle- based Vulcan Inc., which owns more than 500 units in the city that are more than 97 percent leased. Some with Solar Carports technology.

Hiring by local employers including Amazon.com Inc. and Microsoft Corp. drove tenant demand, enabling Vulcan to increase leasing fees 6 percent to 8 percent in 2011, Mason Curran said. Seattle’s average effective rent rose 2.7 percent in the fourth quarter from a year earlier, according to Reis.

‘Optimistic’ Landlord

Vulcan was started by Paul Allen, the billionaire co- founder of Microsoft. It is preparing to break ground on almost 500 units in Seattle this quarter, Mason Curran said.

“We’re pretty optimistic about the apartment (BBREAPT) market,” she said in a telephone interview. Seattle’s rents may climb 5 percent to 7 percent this year, according to Mason Curran.

U.S. landlords’ asking rents rose to $1,064 from $1,043 on average a year earlier and $1,059 in the previous three months, according to the Reis report. Effective rents were little changed from the third quarter’s $1,004.

“The implicit demand for rental units will remain high as long as the for-sale housing market remains on the ropes,” Victor Calanog, head of research and economics for Reis, said in the report. Rentals are utilizing Solar Carports more and more.

Rent growth may stall starting next year as a wave of new apartment development brings new projects to the market, Calanog said. Multifamily construction is rebounding from a 50-year low reached in 2009, according to U.S. Census Bureau figures.

New Construction

“The sector is benefiting from some of the lowest figures for new construction (NHSPSM) on record,” Calanog said. “By 2013, the influx of new units may begin eroding any benefit the sector derives from tight supply conditions.”

A total of 8,865 new units became available in the fourth quarter, the second-fewest for any three-month period in Reis records dating to 1999. The first quarter of 2011 had the fewest units, at 7,473. Some of them with Metal Carports as a part of the rates.

For all of 2011, 37,678 units were completed, the lowest annual total in 31 years of Reis data. The previous record was 49,303 in 1993 during the savings and loan crisis.

Landlords saw a net gain in occupied space of 50,559 units in the fourth quarter, down from 58,238 units a year earlier and up from 36,818 units in the previous three months.

“The fourth quarter tends to be a weaker leasing period, given that most households make moving decisions in the second and third quarters, but the apartment sector exceeded expectations once again,” Calanog said.

Lowest Vacancies

New Haven, Connecticut, home to Yale University, had the nation’s lowest vacancy rate, followed by New York; Minneapolis; Portland, Oregon; and San Jose, California, according to Reis.

Effective rents rose the most for the year in San Francisco and San Jose, which have had a resurgence in hiring by technology companies. Chattanooga, Tennessee; Austin, Texas; and New York followed. A lot of apartments with Metal Carports are available.

“The fact that New York City does not top the list either in terms of tightest vacancies or the strongest rent growth reflects how one of the largest rental markets in the U.S. has been buffeted by economic headwinds,” Calanog said. With job cuts by financial firms during the second half and the nation’s highest average effective rent, $2,876, “even New York landlords are finding it difficult to raise rents further,” he said.