Credit crunch casts wide net
Business Courier of Cincinnati - by Dan Monk, Lisa biank Fasig, Laura baverman, Lucy May and Steve Watkins Staff Reporters
Media
Changing how ESJ Carrier does business
Sandra Ambrose-Clark didn't need a screaming headline to tell her the scary news about the economy. She's in the trucking business.
"The transportation industry is truly a barometer," said Ambrose-Clark, president of ESJ Carrier Corp. "And we're a commodities carrier. When the housing market's off, everything's off."
Despite the crunch, Ambrose-Clark still is working to grow her family-owned business. She's just growing the brokerage side, which isn't asset-based.
"I'm not taking on debt with new trucks," she said.
The crunch also has changed the way Ambrose-Clark runs her business. She's diversified by starting to import and export goods and is looking for other ways to branch out. And, in another sign of the times, she's fielding calls from companies that want to buy ESJ.
"I get about one or two calls a week," she said. "I don't call them all back. I'm in this - no pun intended - for the long haul."
Hightowers will find alternatives
Stephen Hightower isn't too worried about what the credit crunch will mean for his business banking relationships because his Franklin-based Hightowers Petroleum Co. has never had strong banking relationships.
"I don't have any debt with them, and they're not extending any," he said.
Hightower has grown his volume 200 percent so far this year, using nontraditional financing methods and increasing his business with existing clients, he said.
Still, he expects even nontraditional financing methods to become more competitive as banks tighten lending requirements.
And that will make it all the more difficult for him to get the equity he needs to purchase convenience stores and other big assets. "Out of necessity to continue to stay alive and grow your business you find alternatives."
Equity will be harder for Banks
More cautious lending could impact big local development projects, such as the Banks along the Cincinnati riverfront and Ovation, the mixed-used development planned for Newport's waterfront.
There's little doubt that equity for big projects will be harder to come by, said Cincinnati City Councilman Chris Bortz, a lawyer for Towne Properties in Mount Adams.
But, he said, investors still could view the Banks as a good bet since the first phase of the project is focused on apartments. And Cincinnati's apartment market has been rebounding.
He also thinks the significant government support of the $600 million project will help insulate it from the nasty market forces.
And, he said, if the Federal Reserve Board lowers interest rates, that could help improve the real estate market by spring 2008 or early 2009, just about the time the Banks would have for-sale housing units available.
"This is 12 city blocks, and it's going to take years to build this thing out. A lot can happen in the marketplace in that time," he said. "If you waited for the market to be perfect, it would be too late."
Towne Properties will start fewer units
Bortz's father, Neil Bortz, senior partner at Towne, said it will be three or four months before the subprime problem sorts itself out.
"Nobody knows where the investments are," he said. "In the old days, if you were an S&L and you had a bad loan and it was your loan, the inspectors could say you had a bad loan. But because this is unknown, the market is going to be very volatile."
Already lenders are beginning to underwrite more stringently, Bortz said. Towne Properties is feeling it.
Most Read Stories |
Most Emailed Stories |
