Kuhn's scales back plans for Hill grocery store

Kuhn's has nixed a 100,000-square-foot retail shopping center anchored by a full-service grocery store in the Hill District, Pittsburgh's development chief said Monday.

The Urban Redevelopment Authority is scheduled to decide Nov. 13 whether to sell land on Centre Avenue to locally based Kuhn's or St. Louis-based discount chain Sav-A-Lot, as both vie to build the first Hill District grocery store in nearly 30 years.

"(Kuhn's) is proposing a stand-alone grocery store with a suburban-style setback and a field of parking along Centre Avenue," said Rob Stephany, executive director of the Urban Redevelopment Authority.

Kuhn's original proposal envisioned converting the AUBA Triangle Shops into retail stores, a coffee shop and other offerings with the 40,000-square-foot grocery store nearby, Stephany said.

"This (proposal) keeps the AUBA shops intact and builds a grocery store box only," he said. "It was a neat project. But they decided they wanted to make a go at something more straightforward."

Dan Sakala, spokesman for the independently-owned eight-store Kuhn's chain, declined to discuss the changes.

URA Board members Tonya Payne and State Sen. Jim Ferlo, D-Highland Park, said Hill District residents must have an opportunity to scrutinize any changes.

The URA and the Pittsburgh Penguins have committed $2 million -- $1 million each -- toward construction of a new grocery store in the Hill District. The funding is part of a community benefits agreement negotiated by Hill District residents who wanted neighborhood improvements in exchange for living next to a new $290 million arena.

"I don't want to put my money down for a Mercedes and then find out that we ended up with a Hugo," said Payne, who had not reviewed the new plans.

If it's not vetted publicly before the authority's Nov. 13 meeting, she would likely vote in favor of Sav-A-Lot's smaller, 16,000-square-foot store, which does not include a pharmacy and some other amenities that residents have requested.

"The worst thing that could happen is not to have full public disclosure," Ferlo said.

Save-A-Lot says keeping the deadline set by URA board members last month is critical because delays keep mounting for a new store it first proposed for the neighborhood nine months ago.

Most recently, the URA was expected to make a decision Oct. 16, but it pushed back action for another month when Kuhn's and its development partners asked for more time to work on their proposal.

"This thing has dragged on a long time," said Rick Meyer, Save-A-Lot's vice president of market development. "The reason November is so important is because there are other things that have to get done from a governmental standpoint. We need to get certain approvals, and there will be zoning issues. There is a lot of detail involved."

It will take about six months from the start of construction to complete a new store, Meyer said. "Our goal is to get this thing started as soon as the weather is normal. That's the big thing and why we are pushing to get this done."

Save-A-Lot wants to put a 16,850-square-foot store along Centre Avenue. Prices would be 40 percent less than those in a regular grocery store.

The Kuhn's proposal is being made in conjunction with Hill House Economic Development Corp. and developer McCormack Baron Salazar.

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Allegheny Energy profit dives

Allegheny Energy Inc. said Monday that third-quarter profit fell 23 percent on higher costs for coal, the primary fuel for its power plants, and on milder weather.

Net income fell to $89 million, or 52 cents a share, from $115 million, or 67 cents, a year earlier, the Greensburg-based company said. Sales rose less than 1 percent to $849.6 million.

Coal accounts for 93 percent of the output of Allegheny's generating plants. The average price of coal delivered to the plants will rise 18 percent this year to $47 a ton, Allegheny Energy said in an August investor presentation.

"A lot of it has to do with weather, and their fuel costs rose while sales were flat," said Gordon Howald, an analyst in New York for Calyon Securities USA who rates the stock "buy" and doesn't own any.

Fuel costs rose 22 percent to $299.2 million, mostly for coal, Allegheny Energy said. The benchmark power price in PJM Interconnection LLC, the market for Allegheny Energy's plants, rose 25 percent from a year earlier to average $94.87 a megawatt-hour during the third quarter, according to data from IntercontinentalExchange Inc. compiled by Bloomberg.

Profit fell to 54 cents a share excluding quarterly adjustments to the value of contracts used to lock in commodity prices, Allegheny Energy said. That missed by 13 cents the average estimate of six analysts compiled by Bloomberg.

Net income from power generation and marketing fell 17 percent to $834.7 million on coal costs and reduced output, which dropped 1.1 percent from a year earlier, the company said. The combined capacity of its plants is about 9,700 megawatts. One megawatt is enough power for about 800 average U.S. homes, according to the Energy Department in Washington.

Profit from delivering power fell 66 percent to $4.3 million on milder weather that reduced energy demand for heating and air conditioning and on higher prices for power purchased to supply Virginia customers. Net income from the segment also dropped as the company lost the ability to recover the lower value of plants after market deregulation.

The average residence used 5.7 percent less electricity in the third quarter than a year earlier, Allegheny Energy said. Weather-driven demand for air conditioning fell 22 percent from a year earlier, the company said.

Allegheny Energy cut this year's capital spending budget by $200 million to $1.1 billion because the installation of some pollution-control equipment will be delayed to next year, Chief Financial Officer Kirk Oliver said yesterday on a conference call.

Allegheny Energy's stock dropped 76 cents, or 2.5 percent, to $29.39 yesterday. It has fallen 53 percent this year.

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Home sales in region decline 6.3 percent

Home sales in the Pittsburgh region fell 6.3 percent in September compared with the same month last year -- capping the largest single three-month sales decline in at least 20 years, according to a report from RealStats.

The South Side-based real estate information company also said median home prices dropped in the July-September period, which might mean the end of an unusual period in which prices increased despite a slowdown in sales.

The median home price dipped to $123,958 in the third quarter, down from $125,000 in the third quarter of 2007, RealStats Vice President Daniel A. Murrer said. The median price is the point at which half the homes sold for more and half for less.

Murrer also said the dollar volume of residential sales slipped for the sixth consecutive three-month period, marking the longest continuous period of declining sales in RealStats' database, dating to 1987.

The decline in September marked the 18th consecutive month there has been a drop in home sales. There were 2,311 home sales, compared with 2,467 in September 2007, RealStats said. This September had two more sales days than in September a year ago.

Allegheny County experienced a 7.8 percent drop in homes sold -- from 1,472 to 1,357 -- while Westmoreland County endured a 7.2 percent decline, from 387 to 359. Sales in Beaver County remained unchanged at 170. There was a 4.2 percent drop in Washington County to 228 compared with 238 a year ago, while Butler County, with 197 sales, was down 1.5 percent from 200.

September's median price was unchanged at $118,000, but September's average price rose 2.5 percent to $149,440 from $145,831 a year ago.

The 6.3 percent sales decline in September matched sales reported by West Penn Multi-List, the region's largest home listing service, said Tony Mete, president of the Realtors Association of Metropolitan Pittsburgh.

West Penn Multi-List, which reports sales by its members, reported 1,687 sales for the five counties, compared with 1,800 in the same month last year, Mete said.

George Hackett, president of Coldwell Banker Real Estate/Pittsburgh, expects a similar decline in sales during October and November.

"That's not so bad when one compares the Pittsburgh region with other areas of the nation where house sales are down from 15 to 30 percent," Hackett said.

To combat slow sales, Hackett said Coldwell Banker held a nationwide 10-day price reduction event in October. In the Pittsburgh market, 1,000 of the firm's 3,000 listings had price reductions, and 130 of those homes sold. He expects more to sell in November and December.

"I expect single-digit declines in sales for each of the remaining months of 2008. This is the right time to buy with prices down and mortgage interest rates in the 6-percent range," he said.

RealStats said there were 7,634 sales in the third quarter of 2008, down 22 percent from the 9,030 in the third quarter of 2007.

All counties, except Butler, had double-digit declines in dollar volume, ranging from 14.9 percent in Allegheny to 19.8 percent in Washington. Butler dropped 5.6 percent.

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Howard Hanna grows in Ohio

Howard Hanna Real Estate Services of Pittsburgh said Monday it expanded its Ohio operations with the purchase of Realty One, Ohio's second-largest real estate company, adding 34 offices and 1,400 sales associates.

No price was disclosed on the deal, which was completed Friday.

It is Howard Hanna's second major acquisition in Ohio. In 2003, the company acquired Smythe Cramer Co., adding 2,800 sales associates and 400 employees in northeast Ohio.

The acquisition, which ranks Howard Hanna as the fourth largest real estate company in the nation with $3.6 billion in sales though Sept. 20, brings the total of Hanna offices nationally to 152 offices and 4,400 sales associates, in Pennsylvania, West Virginia and New York.

Realty One, headquartered in downtown Cleveland, will be renamed Howard Hanna, said Helen Hanna Casey, the company's president. It will bring to 79 the number of Hanna offices in Ohio, primarily in the Cleveland area.

"This is a clear demonstration of our company's commitment to this region and the core markets we serve, to their economic vitality and qualify of life people enjoy," said Howard W. "Hoddy" Hanna III, chairman of Howard Hanna Real Estate Services.

Barbara Reynolds, Realty One president, will serve as marketing director of Howard Hanna Real Estate Services Ohio. Howard W. "Hoby" Hanna IV is the president of the Ohio unit.

In addition to the sales associates, Realty One has 163 employees.

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Circuit City closing 155 stores

Circuit City Stores Inc. said today it is closing about 20 percent of its U.S. stores -- cutting thousands of jobs -- in an effort to return the nation's No. 2 consumer electronics retailer to profitability.

The Richmond, Va.-based company said it will shutter 155 of its more than 700 stores in 55 markets, including 11 Ohio stores, by Dec. 31, laying off about 17 percent of its domestic work force. None will close in Pennsylvania. Circuit City also said it will further reduce new store openings and plans to work with landlords to renegotiate leases, lower rent or terminate agreements.

The Circuit City locations closing in Ohio include six in northeast Ohio, three in the Columbus area and one each in Mansfield and Cincinnati.

The move comes as Circuit City heads into a crucial holiday shopping season that could determine its future, amid slower consumer spending that has even the least vulnerable retailers worried.

"The weakened environment has resulted in a slowdown of consumer spending, further impacting our business as well as the business of our vendors," James A. Marcum, vice chairman and acting president and chief executive officer said in a statement. "The combination of these trends has strained severely our working capital and liquidity."

Marcum called the decision to close stores "difficult, but necessary."

Based on nearly 43,000 employees as of Feb. 29, 17 percent could be up to about 7,300 workers. But the company said the number would likely be lower in part because employees in some markets may become employed at other stores. It would not give further details.

Circuit City shares rose 14 cents, or about 54 percent, to 40 cents in early trading Monday.

The company said it expects the stores it is shuttering, which generated about $1.4 billion in net sales in fiscal 2008, will not open on Tuesday and store closing sales will begin on Wednesday.

Circuit City spokesman Bill Cimino said the decision to exit 12 markets was based on store performance rather than for competitive reasons.

"There are some markets where we have more competitors, there are some markets where we have less competitors, in all, we're closing 155 stores that were underperforming," Cimino said. "We're taking this action because we're doing this for the future of the company."

Circuit City also provided updates on other aspects of its business, including restrictive actions taken by vendors, including limiting credit for purchases. But the company said while it is working to secure support from vendors, the "current mix of terms and credit availability is becoming unmanageable for the company."

It also said it has been unable to collect an income tax refund of about $80 million that Circuit City believes it is owed from the federal government.

The company has had only one profitable quarter in the past year, posting a wider second-quarter loss in September with a 13 percent decline in sales at stores open at least a year. Its results have weakened as the company faces significant declines in traffic, heightened competition from rival Best Buy Co. and others and a weakened brand position.

Circuit City, which is reviewing its operations while exploring strategic alternatives, has been working with advisers to determine how to substantially improve its operating and financial performance.

The company said last week that the New York Stock Exchange has warned it that its stock price is not high enough for continued listing.

The NYSE said Circuit City shares had an average closing price of less than $1 over 30 consecutive trading days as of Oct. 22, falling short of the exchange's requirement. Its shares have closed under a dollar in trading since Sept. 30, when they closed at 76 cents. Shares have traded between 17 cents and $8.24 in the last year.

In order to regain compliance with the NYSE, Circuit City's common stock share price and the average share price over a consecutive 30-trading-day period must both exceed $1 within six months following receipt of the notice.

A major Circuit City shareholder -- Classic Fund Management AG, a Liechtenstein-based asset management company -- also said in a regulatory filing last week that it cut its holdings to 8.2 million shares, or about 4.8 percent, from 9.5 million shares, or 5.6 percent. It did not disclose a reason for the change.

Circuit City has been under new leadership since late September when Chief Executive Philip J. Schoonover agreed to step down. He was replaced by Marcum, who was tapped to oversee Circuit City's multiyear turnaround efforts.

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National City CEO to exit bank after PNC deal

National City Corp. Chairman, President and Chief Executive Peter E. Raskind will not stay on after the regional bank's takeover by PNC Financial Services Group Inc. is complete, National City said today.

Raskind had been expected to join PNC as a vice chairman, according to an Oct. 24 filing with the Securities and Exchange Commission. National City spokeswoman Kristen Baird Adams told The Associated Press that it was a personal decision by Raskind to leave the bank, and that he plans to spend more time with his family.

"We respect Peter's decision and wish him well in his future endeavors," PNC spokesman Brian Goerke told The Associated Press.

Raskind, who joined National City in 2000 as head of its consumer finance division, was elected to his current position in July 2007. He succeeded David Daberko, who had been with National City for 39 years and served as its CEO since 1995.

National City was among those banks hit especially hard by the downturn in the mortgage market over the past 18 months. National City had tied its future largely to mortgages, many which were sought by brokers in deals that proved to be high-risk.

Amid National City's plunging share price and questions about its future, Pittsburgh-based PNC in October said it would acquire Ohio's largest bank for about $5.58 billion.

PNC will pay $5.2 billion for National City through a stock transaction that values National City at about $2.23 per share. The remaining $384 million will be a cash payment to certain warrant holders.

The acquisition makes PNC the nation's fifth largest bank by deposits and No. 4 by number of branches. The combined bank will have about $180 billion in deposits and 2,500 branches in 13 states and the District of Columbia. The acquisition is expected to close by Dec. 31.

National City shares fell 21 cents, or 7.6 percent, to $2.49 in morning trading. PNC shares added 58 cents to $67.25.

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Market wallops CEOs, investors

NEW YORK -- Here's something that might provide a bit of solace amid the plunging values in your retirement accounts: Warren Buffett is losing lots of money, too. So are Kirk Kerkorian, Carl Icahn and Sumner Redstone.

They are still plenty rich, but their losses -- some on paper and others actually realized -- illustrate how few have been spared in today's punishing market when even big-name investors, corporate executives and hedge-fund titans are all watching their wealth evaporate.

The portfolio damage for some of these high-flyers has soared to billions of dollars in recent months. And they can't just blame the market's downdraft -- some did themselves in with badly timed stock purchases or margin calls on shares bought with loans.

It has been a painful year for anyone exposed to the stock market. The Standard & Poor's 500 stock index, considered a barometer for the broad market, has lost about 36 percent since January, with every single sector -- including once thriving energy and utilities -- experiencing declines of about 20 percent or more.

Such losses in the last year have wiped out an estimated $2 trillion in equity value from 401(k) and individual retirement accounts, nearly half the holdings in those plans, according to new findings by the Center for Retirement Research at Boston College. Similar losses are seen in the portfolios of private and public pension plans, which have lost $1.9 trillion, the researchers found.

As stocks have plunged, so have the value of chief executives' equity stakes in their own companies. The average year-to-date decline is 49 percent for the corporate stock holdings of CEOs at 175 large U.S. companies, according to new research by compensation consulting firm Steven Hall & Partners.

Topping that list is Buffett, who watched the value of equity in his company, Berkshire Hathaway, fall by about $13.6 billion, or 22 percent, so far this year, to leave his holdings valued at $48.1 billion. Oracle founder and CEO Larry Ellison has seen his equity stake fall by $6.2 billion, or about 24 percent, to $20.1 billion, according to the research that ran from the start of the year through the close of trading Oct. 29.

Rounding out the top five in that study were Microsoft's Steve Ballmer, whose company equity fell by $5.1 billion to $9.4 billion; Amazon.com's Jeff Bezos, whose equity fell by $3.6 billion to $5.7 billion; and News Corp.'s Rupert Murdoch, with a $4 billion contraction to $3 billion.

News Corp. and Microsoft declined comment, while representatives from Berkshire Hathaway, Oracle and Amazon.com didn't respond to requests for comment.

There have been recent instances where executives' large equity positions have blown up -- not only damaging a particular CEO's portfolio but the company's shareholders, too.

A growing number of executives at companies including Boston Scientific, XTO Energy Corp. and Williams Sonoma Inc. have been forced to sell stakes in their companies to cover stock loans to banks and brokers. The company stock was used as collateral for those loans. The falling prices triggered what is known as a "margin call."

"A decrease in insider ownership is bad for corporate governance," said Ben Silverman, director of research at the research firm InsiderScore.com. "Then executives' interests are less aligned with their shareholders."

Redstone, the famed 85-year-old chairman and controlling shareholder of CBS Corp. and Viacom Inc., was forced to sell $233 million worth of nonvoting shares in those companies. That was done to satisfy National Amusements' loan covenants, which had been violated when the value of its CBS and Viacom shares fell below required levels in the loan agreements.

Certainly some of the biggest investors aren't happy with recent market events.

Earlier this year, billionaire Kerkorian's investment firm Tracinda Corp. paid about $1 billion, at an average share price of near $7.10, for about 141 million shares in Ford Motor Corp. That represented a 6.49 percent stake in Ford.

Those shares have tumbled as the automaker's financial condition weakened considerably amid slumping sales and tighter credit conditions. That drove Tracinda to disclose twice in recent weeks that it was selling some of its Ford stock -- one batch of 7.3 million shares sold at an average price of $2.43 each, and the other for 26.4 million shares at an average sale price of $2.01 each. That means for about a quarter of his total Ford holdings, he got $71 million.

Tracinda spokeswoman Winnie Lerner declined to comment.

Activist investor Icahn faces an equally ugly situation with his investment in Yahoo Inc. earlier this year, when he bought about 69 million shares for a nearly 5 percent ownership stake. As of June 30, those shares were valued at about $20.60 each, according to a regulatory filing. That means he's down more than $500 million since late June. Icahn didn't respond to a request for comment.