A year after the two retail giants merged, neither have made headway forming a new identity.

A 2001 press release from Time Warner called John Maatta the “first employee” of The WB, the company’s broadcast television network that goes off the air next month. Maatta, however, won’t be without work as he continues as the chief operating officer of The CW, a new joint network between Warner Bros. and CBS launching on Sept. 18 that essentially incorporates the WB and UPN networks. In that regard, Maatta could be called one of the first employees of the new network whose offices will call Burbank home. A San Francisco native who worked as a trial lawyer for 10 years before making the jump into television management, Maatta is bullish on the new network and the television industry as a whole. “It contains all the elements intellectual satisfaction, meeting interesting people, and working on stimulating issues,” Maatta said. Since Warner Bros. and CBS announced The CW in January, Maatta and his counterpart on the entertainment side Dawn Ostroff who comes from CBS have been busy assembling the new network, a process that didn’t come without its challenges. On the eve of the network’s launch, the three legs of the stool, as Maatta calls programming, distribution and marketing are in place. The network will include shows with large followings from The WB and UPN. They will be broadcast on 199 affiliates reaching 93 percent of U.S. households. Maatta, by the way, names “Smallville” as his favorite show transferring from The WB to the new network. “Of the UPN shows that I haven’t seen that much of ‘Veronica Mars’ looks fascinating to me, as does “Everybody Hates Chris,” Maatta said. Q: Can you talk about your role in putting together the new network? A: Somebody said that time was invented to keep everything from happening at once. That rule doesn’t apply here as we have so much going on. Dawn Ostroff (entertainment president for The CW) was quoted several months ago as saying that what we are doing is like building a car while driving a car. We still have the ongoing businesses going on at UPN and the WB. At the same time we have been involved in a real fascinating experience of everything from prosaic things like getting insurance for the company, working on the MIS system, who’s going to provide the travel, getting new office space. All the bread and butter stuff. The overlay of that is all the network stuff; working on the programming deals, working on promotion, keeping UPN and The WB on the air during the interim period. It’s been jam packed. Every day has been full of stuff. Q: What have been some of the challenges in doing that? A: UPN and The WB were obviously two, separate and thriving companies on their own. In consolidating, people had to be let go. That was a difficult process we had to go through. Each position had to be evaluated and typically there were two very good people for every one position. So that was a very difficult aspect of it. Aside from that, the process has been much smoother than one would probably anticipate. Q: What are you hoping from during the first year of the network? A: I think to have the company fully integrated, to have the staff firing on all cylinders. To get us located in our new home here in Burbank. A lot of success at a network is borne from pure pick and shovel work. I think if we can be smart and be close to flawless in our execution, I think we’ll do pretty well. Q: Having been at The WB what lessons have you learned that can be brought over to The CW? A: The WB was a great environment. What I’ve seen of UPN under Dawn Ostroff, it had many of the same characteristics. The thing that struck me about the WB as we were going through the process of looking to the future and closing it down in September is that a network does not have a lot of physical assets. We license our programs and our most important asset is the people who come to work here every day. It’s a highly creative business and the trick is to hire the best possible people, then listen to them and give creative freedom. You have to foster a really enlightened environment for these businesses to work. Q: If The WB was such a positive environment then why the change? A: I don’t think there was anything internal that mandated the change. I’ve been here since 1993, and day to day the WB environment was incredibly seductive. I do think though the change was borne from the realization that there was a huge opportunities for both of these companies. The fact of the matter is is that as great as a company as Time Warner is The WB was its only broadcast network. The ability to align with CBS, which is like the flagship among broadcast networks, that’s the kind of game changing and transformative opportunity that was just an extraordinary for a company like The WB. The network landscape is a tough environment and I think forward and smart thinking people look for opportunities and this is a huge opportunity. Q: A lot has changed in television since The WB was launched. How is the new network going to be addressing those changes? A: It comes down to quality programming. We, at both UPN, with shows like “America’s Next Top Model” and “Everybody Hates Chris,” and The WB shows “Gilmore Girls,” “Smallville,” “Seventh Heaven” I think the collection of programming assets is very strong. When we started The WB we had no program assets to launch with. The predicate for a successful network is to have programming that viewers want to see. We’re starting The CW with a full pallet of programs that are tried and true. Q: Can you talk about the marketing to get the word out about the new network? A: A lot has been happening in that area. We were fortunate to hire a man named Rick Haskins who had been head of marketing at Lifetime. He’s created a marketing campaign that by all accounts has been fantastic from the color green to the ‘Free to Be’ imagery. We have a mall tour going on around the country. The marketing is part of what I said about firing on all cylinders. It’s one of the legs of the stool. Programming, distribution and marketing those are three things you need to get a network going. On the distribution side we have a really strong station line-up. We’re stronger than The WB was. We went out around the country in the spring working with Peter Schruth from CBS and we signed some of the strongest station groups. It was a pretty easy sell. We were in big demand by stations around the nation. Q: Why do you think that was? A: That wasn’t the case in 1993 when we started The WB and we were going head to head with UPN. It had all the charm of an alley fight to get to affiliates. I think this time station people recognized the programming really gets viewers into the tent. These stations looked at our programming lineup. The broadcasters were anxious to get their hands on “America’s Next Top Model” and “Smallville” at the same network. Q: Tell us how the CW Lounge and the CW Lab fit in with the new network’s plans? A: The lab and the lounge are part of our online initiative to approach younger viewers in particular. The array of ideas and possibilities we have in front of us is breathtaking. We have a lot of smart people at UPN and the WB, people we brought to The CW, people at CBS and Warner Bros. who are able to point us in directions such as new media and wireless, streaming, podcasting. Every kind of iteration of new media that can give us a lift we are looking at all those things. And they seem to dovetail well with our demographic. Q: Other than the technological issues, what are some other issues facing the overall television industry? A: I think the technological changes are first and foremost. There’s an awful lot going on. I think generally for many years, the television industry was a more a placid type of place, where basically if you had a broadcast license in a market you would tend to do well. I think now it is a much more intellectual industry. I think the market pressures made the executive ranks smarter, better. I think stations today are up to snuff in terms of technology, in terms of strategy, in terms of marketing. It’s a real dynamic type of industry. Every time I read that broadcasters are twilight people, caught between a brilliant past and cloudy future it sounds like they are talking about an industry I don’t know. I don’t think the broadcasting business has ever been more vibrant in terms of new opportunities, new approaches. John Maatta Title: Chief Operating Officer and General Counsel, The CW Born: 1952; San Francisco Education: University of California, Hastings College of the Law; University of San Francisco Career Turning Point: 1986 joining Lorimar Telepictures Personal: Married. Three Children.

A young men’s and juniors urban wear concept from Pacific Sunwear of California Inc. called d.e.m.o., has opened its first San Fernando Valley store at General Growth’s Northridge Fashion Center. The store, selling a mix of fashion influences from skateboarding to hip-hop stars like Nelly and Jay-Z, is part of a major push for the concept that first launched eight years ago. Pacific Sunwear, a $1.4 billion chain based in Anaheim, is opening about 100 new stores during fiscal 2006, most of them the original PacSun concept and d.e.m.o. shops which now number close to 200. “We’re looking at malls where we think we have a really multicultural customer base,” said Lou Ann Bett, president of the d.e.m.o. division. “We’re a national chain and we’re always on the lookout for good malls.” Pacific Sunwear’s origins as a surfer-influenced apparel chain has established the company’s PacSun stores in the young adult market. With the addition of d.e.m.o., the company has expanded to reflect the growing diversity of youthful fashion trends. D.e.m.o. caters to 17 to 22 year olds in an arena that has been evolving since the first store opened, Bett explained. Originally a young men’s retailer, d.e.m.o.’s merchandise assortment is now nearly equally divided between young men’s and juniors. But while boys were the earliest adaptors of the apparel, girls now make up the lion’s share of customers. In fiscal 2005, d.e.m.o’s junior sales rose 15 percent on a comparable store basis while its menswear merchandise sales declined 10 percent. “In the market out there at large, typically juniors is around 75 percent of the total,” said Bett. “We’re not there yet. That’s why we see the major growth in juniors. On the young men’s side, we had some internal issues.” Bett said many of those issues have been resolved going forward. Similarly, the chain’s assortment has been changing too, now incorporating a mix of urban, streetwear, skatewear and hip hop with brands like Baby Phat, Rocawear, Sean John, Ecko and Apple Bottoms. In fiscal 2005, d.e.m.o. contributed about 13 percent to the company’s revenues, up from 11 percent in 2003. Westfield’s New Look Expanding a shopping mall these days is a little bit of a devil and the deep blue sea dilemma. More stores means more sales opportunities, but by adding stores, the mall risks the chance that shoppers, pressed for time, will not want to navigate such a large space to find what they are looking for. The folks at Westfield Group are addressing that problem in the renovation of Topanga mall in Canoga Park. At a press tour of the $330 million plus project due to open in October, Westfield officials explained a concept called “precincting,” which will place many of the stores in a particular category in close proximity so that, for instance, a shopper buying kids clothes, can go to one portion of the mall and find most of the shops that cater to kids side-by-side. The same goes for luxury brands, fashion brands, etc. “It’s all about the experience the customer has,” said Carl Schloessman, Westfield’s vice president for marketing in the Western region. “If you want to run in and you have your two kids with you, this affords the opportunity to do that as well.” Which is not to say that Westfield isn’t accounting for families that want to make a day of it at the center, which is adding 120 specialty stores, a new Target, an expanded Nordstrom and, in 2008, a Neiman Marcus. The remodeled center will also have a double-decker carousel, a Westfield Playtown and two family-oriented lounges with plasma screens and room for changing diapers, feeding or just taking a break. Westfield’s extensive remodel includes a new Nordstrom with 205,000 square feet of space, about 50,000 square feet more than the existing store, a two-level Target store with 160,000 square feet, a 120,000-square-foot Neiman Marcus, 140 new shops, a dining terrace modeled after the new Century City dining area with real china and cutlery; and restaurants ranging from The Farm of Beverly Hills to the popular Brentwood bistro Coral Tree Caf & #233;, right down to Panda Express. A number of stores in the lineup are prestigious brands that have never set foot over the hill until now, including A/X Armani, Furla, Burberry, Miss Sixty, Cole Haan, and Sony Style. In addition, Nordstrom will have a full complement of its boutique shop-within-a shop concepts like Dolce & Gabbana, which until now, were limited to the flagship Seattle store. Think Beverly Center on steroids. That, say Westfield officials, is the idea. Aware that Valley retail centers have pretty much left luxury shopping to their rivals over the hill, Westfield sees an opportunity to capture the market for these shoppers where they live. The grand opening of the mall will take place on Oct. 6, including Nordstrom and Target and many of the specialty retailers. Additional stores will open later.

An official with the Metropolitan Transportation Authority touted a planned mixed-use development near the Metro Red Line station in North Hollywood as “a model” of what can be built to encourage people to use public transportation. Request for proposals go out this month to solicit ideas from developers of what they want to do with the 17-acre site, Roger Moliere, executive officer of real property management and development with the MTA told the Livable Communities Council at its meeting Aug. 15. The proposed project mixing residential with commercial and retail uses could not have been done five years ago but since that time there has been an increase in the population base and employment bases in that area that makes it more attractive, Moliere said. “This should be a model where people will be able to live and go places and go shopping without the burden of long trips with their cars,” Moliere said. Moliere raised the North Hollywood project during a presentation to the council about development along transportation corridors, focusing on the Orange Line busway bisecting the San Fernando Valley. The Orange Line terminates in North Hollywood across Lankershim Boulevard from the Red Line station. While the MTA is not in the real estate development business, the agency owns property along transportation corridors and near bus and train stations through right-of-way acquisitions, Moliere said. In the Valley, the MTA has 4-acre parcels at the Balboa and Canoga Park Orange Line stops, and a 12-acre plot containing 1,200 parking spaces at the Sepulveda Orange Line station. The MTA is eyeing the Sepulveda property as a potential development site as there was a “miscalculation” of the number of riders actually using the parking lot, Moliere said. He has met with community residents about future plans for the property and designers from the agency will take input from nearby residents on what should be done with the land, Moliere added. The council used Moliere’s appearance to discuss the importance of creating housing and commercial areas ear transportation hubs to encourage use of mass transit. Some members raised changing the requirement of two parking spaces per multi-family housing unit as a way to reduce reliance on cars. “That could be an incentive for people to move into these things with just one car,” said Dan Blake, director of the San Fernando Valley Economic Research Center at California State University Northridge. While the MTA supports such incentives, Moliere said, such a policy has market implications and could make multi-family housing too expensive to build. An option open to developers would be building a community parking garage that gets torn down once the mass transit system matures, fewer cars are used and the parking no longer needed, Moliere said. The need for parking spaces numbering into the thousands at developments close to transportation hubs was a sign that the Los Angeles mass transit system has a ways to go to reach maturity, Moliere said. The North Hollywood project requires 6,000 parking spaces for its 2 million square feet, of which only 300,000 square feet will be residential. Transit Coalition Executive Director Bart Reed cautioned, however, that plans for mixed use development actually be fulfilled rather than being predominantly residential.

Here in a nutshell is how business adds up at Academy123. Take frustrated math students from around the country, at wit’s end, pulling their hair out because a cosine makes no sense and a + b does not equal c. Add an online homework help program recorded by math teachers based in Southern California straight onto a laptop computer. Multiply by $9.95 per month. Academy123 was founded only two years ago and launched its flagship Nutshell Math program last October yet created a lucrative enough product to catch the eye of Discovery Education leading to its acquisition of the Westlake Village company last month. Discovery Education is a subsidiary of Discovery Communications, owner of the eponymous cable channel. The buyout brings with it the global credibility of the Discovery brand, distribution channels into both homes and schools and access to content in other subject areas that Academy123 can build homework help programs around. “Their ambition is much bigger than we ever could have pursued on our own,” Acaemy123 President and CEO Johannes Larcher said. “As a small start up you have to focus on the sweet spot and we did that.” That sweet spot as the Austrian-born Larcher calls it was middle school and high school level math and the anxiety it causes for students unable to easily grasp the concepts applied to solve algebra and geometry problems. Academy123 provides nearly 1,900 hours worth of online material created by contracted math teachers and vetted by its own employees with math degrees. While Larcher wouldn’t disclose the exact number of Nutshell Math subscribers, he placed it in the tens of thousands. That’s just a fraction of the total number of U.S. students turning to high tech methods for that nudge needed to understand complexities of the classroom. Supplemental educational services are a growing industry and the use of technology gives a student a different approach to understanding a subject other than classroom teaching, said Don Knezek, chief executive officer of the International Society for Technology in Education. “Having to dial in and work in a slightly different delivery system improves the chances for success,” Knezek said. If the buyout by Discovery Education is any indication, Academy123 has been a business concept success. Whether its math homework help product has been an educational success remains unknown to Larcher and the management team. The company lacks quantitative data on whether Nutshell Math results in better grades, only anecdotal evidence from parents and teachers. There are plans, however, for marketing research to answer that question. What helps make Academy123 a success is not knowledge of math but of how to market a subscription service on the Internet and getting its product in front of the right audience at the right time. If there is a common denominator of the Academy123 management team it’s the lack of educational backgrounds. They are marketing people and tech people who honed their skills at companies such as Overture, Countrywide Bank, Bertelsmann Ventures and Akamai Technologies. But Larcher doesn’t see his and the team’s backgrounds as a drawback because Academy123 is foremost a consumer-based business. “It might be different if we were selling to schools directly, which we’re not doing at this point,” Larcher said. Oddly, despite marketing backgrounds the company does not have a huge marketing budget. So Nutshell Math gets promoted through direct e-mail campaign, search engine marketing, and increasingly through word of mouth. The company also appears at conferences and trade shows, such as the ISTE’s National Educational Computing Conference, which took place last month in San Diego. “At each of these the teachers come by the booth and see the product and hopefully we turn them into zealots,” said marketing director Barry Levenson.

What do ya know? The competition for a choice, 26-acre parcel in Chatsworth is turning out to be a local race after all. Brokers representing the Los Angeles Times, which announced late last year that it was closing its Chatsworth plant and selling the property, have issued invitations to a select group of developers and are currently reviewing the bids submitted. The list of companies believed to be bidding for the site reads like a who’s who of local development, representing some of the largest projects in the greater San Fernando Valley. They are believed to include LNR Property Corp., M.W. Ossola and Associates Inc., Overton Moore Properties, Sheridan Ebbert Real Estate Development and Voit Development Co. Although they are not all based here, they have all done extensive work in the area. Executives at the development companies either could not be reached or did not return phone calls. Likewise, Onno Zwaneveld, senior vice president at Trammell Crow, which is conducting the search, declined to name the developers under consideration. “We’re a couple of weeks away,” Zwaneveld said. “No one has been selected.” Trammell Crow did not go out with a public request for proposals, but rather hand-picked the companies invited, sources said. Each has a long history of development projects and most have worked in all phases of development – industrial, office, residential and retail. LNR most recently developed LNR Warner Center, a campus office park in Woodland Hills. Ossola is currently developing a light industrial park and a shopping center in Moorpark. Overton Moore is currently developing Northridge Business Center, a 16-building industrial project. Sheridan Ebbert has current projects in Valencia and Torrance. Voit, which just completed the Burbank Airport Commerce Center, is now working on an addition to The Plant, another industrial site in Panorama City. Other developers may also be involved, some sources said. The project is highly coveted because it is so large and it comes along at a time when there are virtually no large developable parcels on the Valley floor. For that reason, initial speculation was that developers from across the country would throw their hats into the ring. Industrial Sale A 129,000-square foot industrial property in Sun Valley has sold for $13,760,000. The property, at 7606-7660 Clybourn Ave. and 7605 and 7616 Wheatland Ave. and 7616 Clybourn Ave. and 7605-7616 Wheatland Ave., sits on 5.5 acres of land. The buyers, a private investment group, plan to redevelop the property for industrial condominiums. Eli Anishban, principal with Precision Properties in Encino, represented both the buyer and the seller, also a private investor. Westlake Groundbreaking Steadfast Companies and Amstar Group last week broke ground on Westlake Park Place, a 461,000-square-foot office park in Westlake Village. The first phase of the project will encompass five buildings on Townsgate Road ranging in size from 5,550 square-feet to 102,012 square feet. That phase is expected to be completed by Fall, 2007. Steadfast and Amstar believe the best projects serve all types of businesses large operations looking for contiguous blocks of space as well as smaller, entrepreneurial operations seeking an ideal location and amenities,” said Bob Searles, president of Steadfast. “Our project is designed to be highly flexible and to accommodate the widest range of office customers.” The groundbreaking took place on Aug. 24. Moorpark Project Gets Underway Oltmans Construction Co. has begun construction on a 132,500-square-foot corporate headquarters and distribution facility for Warehouse Discount Center in Moorpark. The build-to-suit, at 14339 White Sage Road, will replace the company’s current headquarters office in Agoura Hills and a builder division in Camarillo. The facility will include an additional retail showroom for the company’s home appliance and plumbing fixtures. That retail location will join the Agoura Hills retail outpost, which will remain open, along with other retail operations in Camarillo, Canyon Country, Northridge, Oxnard and Santa Barbara. The project is expected to be completed in March. WDC has more than 180 employees. Burbank Acquisition A 10,000-square foot office building in Burbank was purchased by an owner-user for $3.1 million. The property, at 401-405 Riverside Drive, was acquired by Smart Post Sound, a production company. The buyer was represented by Alexander Wadley, a broker with Lee & Associates-L.A. North/Ventura. The seller, a family trust, was represented by Andrew Berk and Mark Evanoff of Ramsey-Shilling Commercial Real Estate Services. Multifamily Sale A 15-unit apartment building in Glendale has sold for $1.82 million. The building, at 511 S. Verdugo Road, was built in 1962. It is fully occupied. Chuck Dunn, director at Charles Dunn Co.’s downtown offices, represented the buyer, a private investor. Kirk Kabaklian of Kabaklian Realty represented the seller, also a private investor. Senior reporter Shelly Garcia can be reached at (818) 316-3123 or by e-mail at [email protected].

The Hilton Burbank Airport & Convention Center hotel has been sold for $125 million. Pyramid Hotel Opportunity Venture II LLC of Boston will pay about $256,000 per room for the 488-room property. The seller was Strategic Hotels & Resorts Inc., a Chicago real estate investment trust with 19 properties and more than 9,000 rooms across the country. The hotel was projected to contribute $10.1 million in earnings before interest, taxes, depreciation and amortization for 2006, the company said. The deal is expected to close in September. The hotel, at 2500 Hollywood Way, also includes 50,000 square feet of meeting space and the Daily Grill restaurant. The facility was built in 1980 and has around 300 employees. Strategic reported that for the first six months of this year, occupancy at the hotel was 75.4 percent, a .7 percent increase from the same 2005 period. The rate was slightly below the Valley average of 78.49 percent during that same time, according to the hotel trends tracking firm PKF Consulting. Total revenue for the hotel tallied $15.6 million, up 11.4 percent from the previous year, the company reported in its second quarter earnings report released Aug. 2.

SAN FERNANDO VALLEY Burbank Joe: Burbank-ites can choose from yet another coffee house option with the opening of Romancing the Bean in Burbank Village. The 20,000-square-foot shop, adjacent to Gordon Biersch, sports a European-style d & #233;cor and will in the future, host live bands and an open mic night. Owner Kerry Krull has also developed a menu of gourmet salads, sandwiches, deserts and light breakfast entrees to go along with the organic coffees and teas and coffee drinks. Glendale Healthy: Officials and hospital staffers broke ground Aug. 17 on a new Ambulatory Surgery Center at Glendale Adventist Medical Center in Glendale. The 15,500-square-foot facility, at Chevy Chase Drive and Sinclair Avenue, will house four surgical operating rooms, a procedure room and recovery room. It will specialize in outpatient surgical procedures in which patients will be able to return home within a few hours of being treated. Construction is scheduled to finish by next October. Reseda Wizard: The post office at 7320 Reseda Blvd. in Reseda will be renamed after the celebrated UCLA basketball coach John R. Wooden. President George W. Bush on Aug. 17 signed legislation to officially name the Reseda facility the Coach John Wooden Post Office Building. Wooden, 95, is a 30-year Encino resident, although the Encino post office at 5805 White Oak Ave. was named after Los Angeles Lakers sportscaster “Chick” Hearn in 2002. The Reseda facility was the next closest, near where Wooden’s daughter, Nancy Muehlhausen, lives. Before retiring in 1975, Wooden coached to UCLA Bruins to 10 nation titles, seven consecutively. The official ceremony will take place Oct. 14, Wooden’s 96th birthday. ANTELOPE VALLEY Palmdale Grant: The Palmdale Regional Airport received a $900,000 grant from the U.S. Department of Transportation Small Community Air Service Development Program. The grant supports a revenue guarantee program for regional jet service on a network carrier from the Palmdale airport. Local governmental agencies contributed $3.7 million for the program. The program seeks to attract regional jet service from Palmdale to a connecting hub market such as Phoenix, San Francisco, or Dallas/Ft. Worth. Los Angeles World Airports, owner and operator of the Palmdale airfield, has been in discussions with several network carriers expressing interest in re-introducing service to Palmdale. SANTA CLARITA VALLEY Valencia Bond: Voters in November will be asked to approve a $160 million bond measure to fund an expansion of the Valencia campus of College of the Canyons. The money would pay for technology upgrades, safety improvements and new classrooms, labs and other facilities. It would also make available an additional $70 million from the state. The 36-year-old community college has faced a space crunch in recent years as more students enroll. This spring, the student population topped 18,000.

This is the second of two parts. The first part can be read here . In the last issue of the Business Journal I confessed my personal worries that the value of my home equity could well vaporize by the time the dust settles on the Southern California real estate market in the next couple of years. Now, if someone had told me to get out of tech stocks and go cash in January of 2000, just think how much farther ahead I’d be today. So at present I have an unexpected real estate windfall in my home, with the writing on the wall everywhere I turn seeming to be about the coming burst of the “housing bubble”. Any wonder why I feel like a deer in the headlights all over again? So what if you could actually “lock in” the value of your equity in either an up or down real estate market? And what if, in the process of preserving or otherwise diversifying your home equity values, you still own the home as an asset, plus additional diversified assets newly created when you “cashed out” those diminishing home equity values to salvage them while you still can. Tempting, but there would have to be a down side, wouldn’t there? Building diversified wealth You see, the name of the game is actually number of assets you own and the growth of those multiple assets, not the equity you’ve built up in one single asset. (Which for most working people is namely their home and only their home). I don’t have to tell you savvy real estate investors that rather than owning one home with $500,000 of equity in it, I would rather own 10 homes with $50,000 of equity each. as long as real estate values are increasing. But just as such extreme leveraging can build great wealth in an appreciating market, just think of the crash you’d hear if 10 mortgaged homes took a slide in price in the coming years. One answer: It’s time to diversify! About a year ago Carrol Lloyd in the San Francisco Chronicle started sounding warning signals that Robert Kiyosaki himself, the financial guru who has spurred so many working people to become big-time leveraged real estate investors, has privately become “a major bubble blower”. She points out ” he’s begun posting articles that caution against what might be called ‘sur-real estate exuberance.’ He confesses that he’s currently dumping real estate that produces no cash flow” (from rental income). Holy Cow! My guess is that he’s diversifying. Shoving all your personal worth into the equity in your home creates several problems: 1.) Less Safety: All your eggs are in one basket. If this housing market does decline, it’s not your debt that will decrease it’s all the extra principal payments you’ve made into the mortgage toward an early pay-off that will vanish overnight! Plus, do you know that the first foreclosure targets in a down market are those mortgages that have been mostly paid down? That’s because the bank knows they can sell that home for a discount and still recapture their loan. If the home was 100 percent mortgaged and the market declines, the bank doesn’t want the home, they want to keep you in the loan and they’ll bargain! 2.) Less Liquidity: Scenario 1: The greatest common denominators in home mortgage foreclosure are twofold: Loss of income or personal disability. At those times when you may most need to tap into the equity in your house, borrowing will be either very costly (when the lender discovers your circumstances) or impossible. Scenario 2: In 1999 I was forced to sell a house in Orange I had owned for 9 years at a $30,000 loss. I was renting the home out, and when expenses came up I couldn’t afford due to poor current cash flow, with no liquidity I was forced to sell in a down market. Adequate liquidity (money OUT of the house to draw upon) allows you to wait out down markets if you want to sell. 3.) Zero Rate of Return: Again, it’s not the equity that makes your home values increase, it’s the perceived desirability of the asset on the market, multiplied by the number of assets you own. Do you seriously think Donald Trump waited to pay off his loan on Trump Towers, before he started his next project? He wants multiple appreciating assets, baby equity be damned! The fact is that by proper established techniques of home equity optimization the average American family could greatly increase the safety and liquidity of their nest egg while immediately doubling their asset base and thereby often realizing an extra $500,000 of newly found eventual retirement income, without having to devote one dime more toward retirement than they save today! For example, in the simplest form, let’s say that you have $300,000 of equity in a $600,000 home. If you separated this equity from the home into a cash position, even earning only a net 6% ($18,000), and your home value goes down $200,000 in value, did you really lose the money? No, it’s still intact, plus it’s earning. But if your home value goes up by 5%, was there any disadvantage? No. Now your home went up $30,000 and your cash account went up $18,000. In fact, you’ll find that if your goal is to pay your mortgage off sooner, then this side fund technique will get you there faster than surrendering extra principal payments to the mortgage company (which I purport you never want to do) plus you keep control of your equity in the event of unemployment or disability, when borrowing it back will be either very expensive or impossible. WARNING: Don’t do this without adult supervision, folks! The trick is that you must be fairly certain that the separated equity will earn at a rate higher than the cost of the mortgage. A good financial planner can accomplish this in ways you would not intuitively implement on your own by utilizing two key tools; Capturing the spreads between the simple interest mortgage and the compounding interest in the cash account; and the tax-deductible mortgage interest vs. tax-free interest earnings required as part of the cash account you set up. We have implemented dozens of equity optimization models like this, and their outcomes can vary considerably based on age, current cash flow needs, and even what type of mortgage options are available to you. Two good sources of reference material you can study further on this are the DVD “Why You Should Carry a Big Long Mortgage and Never Pay It Off” by Ric Edelman (ricedelman.com/store/video_mortgage.asp) and the book “Missed Fortune 101” by Douglas Andrew (available at Amazon.com). Bruce M. Weide is the author of “Getting Rid of Taxes in Business and Retirement” and President of TAX-FREE Benefit Specialists & Insurance Services, a firm in the San Fernando Valley dedicated to bringing Fortune 500 tax and retirement savings strategies to small and mid-size businesses. He can be reached at [email protected] or by calling 818-896-5958.

Scott Barnett, president and CEO of Bubba Gump Shrimp Co., is optimistic that his new “Forrest Gump”-themed restaurant at CityWalk will fare better than Gladstone’s, a branch of the popular Malibu seafood eatery that occupied the space until it shut down last year. “I have a high degree of confidence,” Barnett said. “But I’m still cautious. I’m really cautious about every site.” Barnett said the new Bubba Gump, which opened Aug. 26, is a familiar brand in an attractive spot with lots of foot traffic and a mix of locals and tourists. The 22-eatery chain started in 1996 as a partnership between Paramount Pictures, which released “Forrest Gump,” and Monterey, Calif.-based Rusty Pelican Restaurants has had success at similar tourist-friendly destinations including Santa Monica Pier, Mall of America and Times Square. Barnett said CityWalk fits into the scheme. “I can’t think of a better location. It makes a tremendous amount of sense,” he said. “We’ve been working with Universal for years for this site.” The 10,500-square-foot storefront is CityWalk’s largest and for nine years was home to Gladstone’s since that portion of the outdoor entertainment center opened in 1998. The restaurant was a franchise licensed by Gladstone’s corporate owners, California Beach Restaurants Inc., to Universal, which ran the day-to-day operations. The 760-seat restaurant with its faux nautical equipment and patio reminiscent of the Malibu original lasted until 2005. Eliot Sekuler, a spokesman for NBC Universal, which owns CityWalk, said the company does not comment about tenant issues and would not discuss why Gladstone’s left. “We wouldn’t comment on Gladstone’s departure other than to note that Gladstone’s had a very successful run,” Sekuler said. However, Barnett said that he was told that Gladstone’s was doing “very substantial sales” when it was closed by Universal last year in favor of Bubba Gump. He said it may have been a case of Universal wanting to swap one tenant for a higher-performing one. “Universal probably wanted a concept in there that could get better revenue and where they could get rent from,” Barnett said. Unlike the Gladstone’s arrangement, Bubba Gump will own the restaurant and lease the space from Universal, Barnett said. Movie history Universal officials would also not talk about Bubba Gump, but in a written statement, Universal Studios Hollywood President and Chief Operating Officer Larry Kurzweil, said the restaurant fits well into CityWalk’s theme. Bubba Gump “gives us a partnership with a brand that has been highly successful in many other locations, including such other ‘entertainment epicenters’ as New York’s Times Square, where it’s a proven popular dining choice for both local and out-of-town visitors,” he said. “As a bonus, the restaurant has a fun, upbeat connection to movie history, which is at the core of our brand position.” The new Bubba Gump arrives as Universal moves into the last segment of the competitive summer season. The park does not release ticket figures, but in 2005 the now-defunct magazine “Amusement Business” estimated that attendance at the park dropped 6 percent from a year prior, or almost 4.7 million people. In response, Universal has mounted an aggressive television, radio and print advertising campaign to drum up new business and has slashed ticket prices. CityWalk, which is physically separate from the park but feels the impact of lower attendance, has also added more promotional events. Varied reactions The push has netted some results, but business is still down from several years ago, according to some CityWalk tenants. “They’re not doing as well as when we first opened,” said Jody Maroni, who opened a branch of his Venice gourmet hotdog stand Jody Maroni’s Sausage Kingdom at CityWalk several years ago. In the early years, tourists lined up down the street. These days, business is much steadier, said Maroni, who turned the stand into a franchise a few years ago. “It went from unbelievable to really good,” he said. He credited the lost business to the general slowdown after 9/11 and fewer international tourists. Attention is also being drawn away by new projects, such as The Grove in Hollywood, Maroni said. “It’s still a great place to do business. But it’s certainly not The Grove,” he said. Same is true over at Daily Grill, one of 21 American-fare restaurants West L.A.-based owner Grill Concepts has across the country. Vice President of Operations Louie Feinstein said revenues have improved this season after a series of lean years. “We’ve had a very good summer. Sales are up,” he said. “That’s what we look for.” CityWalk seems to be steadily drawing more crowds, he said. “It’s come back. CityWalk has had its ups and downs,” he said. One sign that business is holding steady is the addition of new tenants, such as the Bubba Gump restaurant a few yards away from Daily Grill. That could mean more competition, but Feinstein thinks any new attention benefits the existing stores. “It’s a well-known brand that will bring people up to the Walk. Getting more there is great for us,” he said.