Monthly Letter

'm still not sure about this. It is easy to type and rant but who really cares to read it. I already write my monthly letter and many read and enjoy that. I live on the phone and by email. I even use instant messaging with my co workers and my kids. I think my goal as a blogger (if I am going to even become one) is to give my clients (and maybe the world!) a little better visibility as to what is going on in the market, little snippets of trends or things I see happening. I guess if you take a top down look at this, it starts with our business plan and model (Our Pyramid which is part of our Logo and has all of our personal and business philosophy posted on it - see "Our Mission Statement" on our Web Page) and annually you get a look at the past year and our forecast of the next year (See "Gold Report" on our Web Site), this is of course is supplemented by our Monthly Letter (See "Monthly Letter" on our Web Site). Now you'll get my near minute be minute look at market activity, breaking news and it's affect on things, deals done or being done, case studies and more links or useful attachments that might help you, the owners and users of commercial real estate.

So, all in all this might be fun. One more thing to keep me busy though ... hmm. These days I feel like I am going so fast I am being physically separated from my shadow (I even had to hold the elevator for it the other day!).

Don

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Well at least the front page of the Real Estate section of the San Diego Daily Transcript (which is the daily legal and real estate newspaper of San Diego). For those of you who don't subscribe, it is linked here (double click on the text);

Retail Market Strong 

The press never quite quotes you like you said it but the gist of it is close enough. Of course for those of you who are already readers of my monthly letter and the Gold Report you already knew all this stuff!

I will tell you, with Day Light Savings changed and with weather like the last few days you can understand why San Diego will add a million more people over the next 20 to 30 years!

Regards, Don

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The buzz has been on the street for about 6 months that Tesco (the world's third largest grocery store chain) is coming to town. Plans are for Southern California, Phoenix and Las Vegas. I'm working on 3 locations myself. The concept is a 14,000 sf freestanding building like a Walgreens that will look sort of like a Trader Joe's but more of a large 7-11 with the addition of ready serve meals like many grocery stores. The news today though is that Warren Buffet has boosted his stake and that's a big vote of confidence. News story is below;

Buffett Buys More Tesco Shares, Raising Stake to 2.9%

By Angharad Couch and Sarah Thompson

March 2 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. increased its stake in Tesco Plc, according to the U.S. insurance and investment firm's annual letter to shareholders.

Berkshire Hathaway owns 229.7 million Tesco shares, or 2.9 percent of Britain's biggest retailer, yesterday's letter shows. That makes it Tesco's fifth-largest shareholder, according to Bloomberg data. Omaha, Nebraska-based Berkshire had held a stake of 2 percent before today, according to the most recent filings.

Buffett, the world's second-richest man, first bought shares in Tesco last year after the Cheshunt, England-based retailer said it would open convenience stores on the U.S. West Coast. The outlets will take on 7-Eleven Inc. and Trader Joe's to win time-pressed shoppers in southwest U.S. cities. Prevented by planning restrictions from expanding its U.K. supermarkets, Tesco is also adding stores from China to Turkey.

``Buffett is realizing that with Tesco moving into the U.S. with a fantastic format and great management, they are the ones to back,'' said Chris Gower, an analyst at Man Securities in London. ``I wouldn't be surprised if other investors start piling in. They look at Buffett as the shining light.''

Buffett's note didn't discuss Berkshire's Tesco investment. The company's shares rose 8.75 pence, or 2.1 percent, to 431.75 pence in London, giving the retailer a market value of 34.3 billion pounds ($66.7 billion).

U.S. Operations

Morgan Stanley raised its price estimate on Tesco stock to 490 pence from 380 pence today, citing the prospects for international expansion.

The retailer's ``operations are still undervalued,'' Morgan Stanley analyst Nick Coulter wrote. He estimates the U.S. stores will have $1,300 in sales per square foot and profit margins before interest and taxes of 6 percent, valuing the business at 46 pence a share.

The British retailer has said it will recruit more than 2,500 U.S. staff and will open Fresh & Easy Neighborhood Market outlets later this year in Phoenix, Las Vegas, Los Angeles and San Diego. The stores will be based on the Tesco Express convenience store U.K. format, selling high-quality ready-made meals and fresh produce. Tesco plans to spend as much as 250 million pounds a year opening U.S. outlets.

Investors comb Buffett's annual Berkshire Hathaway letters for insights into everything from investments and acquisitions to executive pay and economic policy. The letters disclose most of the company's holdings worldwide. Buffett was labeled ``the world's greatest investor'' in Robert Hagstrom's 1994 biography.

To contact the reporters on this story: Angharad Couch in London at acouch2@bloomberg.net ; Sarah Thompson in London at sthompson17@bloomberg.net

Last Updated: March 2, 2007 11:49 EST

Regards, Don (858.486.9999)

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The way I look at it in my business is that I am unemployed everyday when I wake up! However, I'm not included in those statistics that are reported as unemployment! This morning the headline read that the San Diego County unemployment rate had climbed. Well it did but.... It went from 3.7% in December (almost unheard of) to 4.3% in January. And to put things in focus last January (2006) we were are 4.1%. The way I look at it, we haven't changed much. You know the difference between a reccession and a depression is that in a reccession your neighbor is unemployed and in a depression YOU are unemployed. Steady as she goes Mr. Bernanke!

Don (858.486.9999)

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I had the pleasure of attending the Univesity of San Diego annual Commercial Real Estate forecast event last month. Sam Zell the real estate mogul and billionaire was the keynote speaker. I learned two things and thought I would pass them on to you.

1. Sam noted that rents rise to meet construction or replacement costs. I agree 100%. Given the high cost of construction right now we have a lot of room for rents to go up. I believe this creates a "protected" investment opportunity right now. It is not if but when will rents rise.

2. Sam apparently does an annual video (usually to music) that gives his view of some economic issue. They are very insightful and educational. I have posted the web link below (double click on it). He showed the 2005 one on liquidity (wow is that one spot on). I particularly like the 2003 "Wired Exports" one. I hope you enjoy them as much as I did. Good economics lessons to music!

Sam Zell Year End Gifts

Regards, Don (858.486.9999)

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