A local manufacturer of industrial packaging has added a sixth facility in the San Fernando Valley, an expansion designed to accommodate the changing landscape for warehousing these goods. Marfred Industries based in Sun Valley acquired a 100,000-square-foot warehousing facility at 11500 Sheldon St., increasing the company’s warehousing capacity by one-third. For most of its history, family-owned Marfred has been a manufacturer and distributor of packaging materials. But in the past few years, the company has found that its customers prefer to warehouse their packaging materials with Marfred as well. “We’re one of the few companies that built a large business on warehousing products specially made for our customers, and that part of the business is mushrooming,” said Marvin Fenster, president and chairman of the company. What Marfred’s clients learned is that they can better utilize their production space for manufacturing instead of storing packaging materials. Marfred, which builds storage cost into its pricing structure, stores the packaging and delivers it to customers as needed. “Over the last two years, we went from about 20,000 square feet in dedicated warehouse space to 160,000 square feet,” Fenster said. Warehouse space currently accounts for about 300,000 square feet of the company’s 475,000 square feet of facilities in the Valley. Another warehouse is located in Las Vegas. Marfred’s six buildings are located in Lakeview Terrace, Pacoima and North Hollywood as well as Sun Valley. The company employs about 300 people. The purchase price of the new building, which is located on three acres of land and includes 18 loading-dock positions and 1,800 square feet of office space, was about $6 million. “It’s an investment for us,” Fenster said. “The company is family owned, so it makes sense for us to own our own real estate. We can control our own destiny.” Ross Thomas, a principal with Delphi Business Properties, represented Marfred in the transaction. Anthony P. Maniscalchi and Mike Maniscalchi of Stevenson Real Estate Services represented the seller, Molding Corp. of America. Woodland Hills Sale A private investor has acquired the 21,450-square-foot Brickcourt office building in Woodland Hills from Holualoa Realty Advisors. The purchase price for the property, at 20350 Ventura Blvd., was in excess of $3.5 million. “This is the third time I’ve sold the building in 10 years,” said Bruce Frasco, a broker with Charles Dunn Co., who represented the seller and the buyer, Barry Berkett. “Each time, there’s been a substantial increase in the price.” Tenants in the building, which is fully occupied, include WebMD and Lucent Technologies. Frasco will continue to serve as leasing agent for the property. On the Block A group of private investors has placed a 210,283-square-foot industrial building on the block in the city of San Fernando. The building at 675 Glenoaks Blvd. is listed for sale at $13.6 million or lease at 56 cents per square foot, according to officials at Delphi Business Properties, which is representing the property. The agents, Delphi’s David Hoffberg and Jerry Scullin, believe the property is among only a couple of buildings of its size offered for sale or lease in the San Fernando Valley in several years. The tilt-up structure with 16 truck loading positions, 45,000 square feet of office space and parking for 397 cars, is being vacated by its current tenant. Office Facelift Private investors have purchased a Camarillo office building with plans to pump about $500,000 into renovating the property. The 37,000-square-foot building, located on two acres of land at 333 N. Lantana St., sold for $2.5 million. It is located across from the Camarillo Outlet Mall. About 65 percent of the building is currently occupied. The new owners plan to upgrade the common areas and provide extensive tenant improvements to the offices. Tony Principe, a broker with Westcord Commercial Real Estate Services, represented the buyer and will also serve as leasing agent for the property. Carpenters Pension Fund was the seller. Tarzana Acquisition Michael Toth, an investor who owns a number of properties in the San Fernando Valley, has purchased a 23,000-square-foot office building in Tarzana for about $1.6 million. The building at 6047 Tampa Ave. is 98 percent occupied. Jeff Gershon of Told Partners represented Toth in the transaction. Told’s Sylvia MacAller and Randy Howard represented the sellers, Tampa & Topham Plaza. Sunland Strip Center Sold Private investor Bill Fox acquired the Sunland Auto Center for $1.2 million. The center, located at 9007 Sunland Blvd., includes about 17,000 square feet of retail space and is fully occupied. Jiffy Lube is the anchor tenant. Joe Lopez and Patti Kutschko of Westcord Commercial Real Estate Services represented the buyer and the seller, Sun Pen Investments. Closer to Home Planned Estate Services leased about 4,000 square feet of office space at 340 N. Westlake Blvd. in the Westlake Office Park. Officials at the financial planning and insurance company made the move from Pasadena because they live in the Conejo Valley, said Richard H. Linsday, managing principal for PES. The company continues to keep a small Pasadena office along with offices in Mission Viego, San Diego and Las Vegas. “I’m still, ‘Have gun, will travel,'” said Linsday. “But the times I’m able to work in Conejo Valley, it’s nice to have a 10-minute commute.” Deron White, a broker with CB Richard Ellis Inc., represented PES. Corbett Richmond at NAI Capital Commercial represented the landlord, Sheffield Properties of Illinois. Staff reporter Shelly Garcia can be reached at (818) 710-2731 or by e-mail at [email protected].

A factor often overlooked in eyestrain problems is lighting and glare. Studies have shown that workers rate good lighting as the single most important aspect of the office environment. This is followed by air quality and comfortable chairs. Improper lighting is sometimes difficult to discern. You immediately recognize very low or very bright settings, but marginal lighting (enough light to see your work but maybe not see it well) may not be perceived as a problem. Bright fluorescent lights over and behind the user cause reflections on the monitor face that make it difficult to read; this results in eyestrain and headaches. Often the monitor, and not the lighting, is blamed. With the monitor face being slightly convex, troublesome reflections can come from wide angles to the screen. Also, the common practice of tilting the monitor back increases the incidence of reflections from ceiling fixtures. There are two glare problems to deal with, direct and indirect. Direct glare comes from line-of-sight light sources such as lights or windows. Since terminal users are looking forward instead of down at their desks, direct glare light sources are evident to them. Indirect glare, or reflection, is probably the most common problem for terminal users. Indirect glare is caused by light from bright objects, such as light fixtures, reflecting from smooth or glossy surfaces. Monitors can have either a specular or a diffuse reflection. Specular reflections are mirror-like sharp images reflected from the monitor back into the users’ faces. Diffuse reflections are reflections from light that penetrates the monitor’s glass surface and is reflected off of the phosphor layer behind the glass. Since the phosphor is somewhat rough, no sharp or defined image appears brighter with the effect of washing out the image. The type of light fixtures used in an office is a factor in the amount of direct glare that is present. Overhead lighting fixtures (called luminaires) are a common source of direct glare. Light fixtures that are low and in the line of sight are glare-producing sources. Often windows will be left unshielded to supplement ambient lighting or to offer a view. For the VDT user the sunshine just presents another glare source. A comfortable light level is important for all office workers regardless of whether they work at a computer. A good balance is hard to achieve but can be done with planning. Robert McNamera is a Office Standards Consultant based in San Jose.

Demand for office and Research and Development Space in the Los Angeles Basin is surging, growing at a pace that rivals that of the late 1980s. Much of the growth in demand is coming from “new technology firms” & #173; firms that are tapping into opportunities brought about by the Internet and by increased computer capabilities. In order to understand this phenomenon better and its implications for commercial real estate, we asked our managers and brokers about the trends they are seeing in the marketplace. This article summarizes their observations. What do new technology firms do? In Southern California, the focus tends to be more on computer and Internet content and application rather than on computer manufacturing. On software programs rather than on hardware. On computer games and electronic entertainment. There also is a very large and vibrant biotech industry in the region, as well as renewed strength in firms designing satellite and communication equipment. In addition, a growing number of firms is emerging applying technology in new ways in “old sectors”. For example, Orange County has emerged as a center for using new, highly sophisticated technology in printing. Orange County and the South Bay have emerged as important computer-assisted design centers for the automobile and apparel industries. What types of firms are growing the fastest? The majority of the growth is taking place among firms that have been in business in the area for approximately five to fifteen years, and are now expanding. These were small companies, with 5 or10 employees, who now suddenly find themselves with 50 or even 200 employees. There is also significant growth among the high-tech divisions of established traditional firms. What is the labor force like in these firms? The labor force in new technology firms tends to be young (20s and 30s), highly educated, affluent professionals. A large percentage is foreign-born. They work and play hard, and value creativity and independence. Where in the Los Angeles Basin is the most of the growth by new technology firms taking place? Currently, most of the growth by new technology firms is taking place in: — West Los Angeles, particularly in a high-tech corridor that has emerged between the ocean and the 405 Freeway from El Segundo on the south to Santa Monica and Westwood on the north —The West San Fernando Valley, in a corridor along the 101 Freeway from Newbury Park on the west to Warner Center on the east; —South Orange County, including the Research Park near UCI, the Spectrum in Irvine and Aliso Viejo; and Pasadena. Activity is also emerging in Camarillo and Santa Barbara. Why these areas? These are the areas with the highest quality residential neighborhoods in the Los Angeles Basin. The owners of new technology companies want their companies near their homes. Proximity to quality residential areas is also a very important factor in recruiting and retaining a high-skill work force. Most of these areas are also near prominent universities, including UCLA, UCI and Cal Tech. This enables synergies with the faculty and resources of the university, and enhances the ability to recruit recent graduates. In addition, these areas already have a critical mass of new technology firms. Once a critical mass is established, it tends to build upon itself. These areas become, in effect, think tank environments, where important face-to-face encounters can readily take place. A high level of movement by employees among firms is common, and proximity of similar firms enables this. The proximity also enables small firms and suppliers to easily interact on large projects. How great is the impact of new technology firms upon demand commercial real estate? In the areas identified above, approximately 20% to 25% of the office activity and approximately 50% of the Research & Development activity is by new technology firms or divisions. This represents a very large amount of leasing activity & #173; approximately 3 to 4 million square feet per year. What are these firms looking for in terms of office or R & D; space? New technology firms are looking for: —Fun, creative, flexible, “loft-like” space —High ceilings and large windows that open —Balconies —Concrete floors —Exposed ductwork —A low-rise, campus environment —Exercise facilities; basketball courts; BBQ areas —Lush landscaping —Large floor plates, open plans, modular partitions —State-of-the-art HVAC, electrical and high-speed internet access —24/ 7 operations (air conditioning; security; access) —4 to 5 parking spaces per 1000 SF —Services and amenities —Expansion opportunities —Signage & #173; very important for establishing the credibility of new firms —Quality environment —Telecommunication security —Proximity to quality residential neighborhoods New technology firms are not very price sensitive, and are willing to pay top dollar for quality space. What issues are emerging for landlords and how are they dealing with them? The recent gyrations of the NASDAQ and lack of profits by many new technology and dot.com companies have raised some concerns regarding the risks associated with leasing to such firms. Tightening market conditions have also enabled owners to become more “discriminating.” In order to protect themselves, owners are typically requiring: * Letters of credit; * Cash in an escrow account; * Co-guarantees; and, most importantly, * A strong financial statement. Growing numbers are also limiting the percentage of space leased to new technology and dot.com firms. Implications Opportunities clearly exist for serving this rapidly growing segment of the economy. The attraction to “fun and funky” space presents opportunities for repositioning existing, older retail and industrial properties. Areas that come to mind include older industrial facilities in the east San Fernando Valley. However, attention must be given to the very special requirements of new technology firms, including adequate 24-hour parking, security and electrical systems. Also, the risks associated with these firms need to be understood, and protection established. New technology firms need to understand that owners have significant concerns regarding risk, and are no longer as eager to obtain just any tenant. Their best defense will be a well-prepared financial statement. This article was provided by Lisa Laing, Director of Marketing for NAI Capital Commercial Real Estate. For more information, please call NAI directly at 818/905-2400, or see their website at www.naicapital.com.

The fate of Glendale-based casino operator Pinnacle Entertainment Inc. (formerly Hollywood Park Inc.) is all but sealed. Company shareholders will vote Sept. 19 on a proposed acquisition by Harveys Casino Resorts of Nevada that, if fully approved, will make Pinnacle part of the privately held company later this year. Pinnacle officials expect shareholders to approve the deal. Pinnacle’s stock has been riding near its high, trading around $21 since the March announcement that Harveys would offer $24 a share in cash to buy the company. “The stock is currently trading up on the merger news,” said Pinnacle Chief Financial Officer Bruce Hinckley. “(On) The Street, everyone is basically waiting to see if the merger closes.” Analysts and company officials expect the deal to close. But before it does, both sides have several hurdles left to clear. By far the biggest challenge will be for Harveys’ parent company, Los Angeles-based Colony Capital LLC, to raise $1.4 billion in the coming months to fund the merger. Analyst Michael Crawford with B. Riley & Co. said he believes Colony can pull it off. “That’s not expected to be a major impediment,” Crawford said. The other obstacle is the opening of Pinnacle’s newest outlet, Belterra Resort and Casino, a riverboat gambling parlor to be based in Indiana. The resort was expected to open Aug. 31, but disaster struck. As the Alabama-built riverboat was heading up the Mississippi River to its new home, it hit a cement barge, cutting an 80-foot gash through the operations room and severing computer wires for the casino. The Belterra is now in New Orleans being repaired, and Pinnacle expects to open the casino Oct. 31. As part of the merger agreement, Belterra was supposed to be opened by Sept. 15, but Hinckley said Harveys is expected to allow the changed timeframe. Still, the Belterra crash could stop the merger, Crawford said. “It gives Harveys the opportunity to walk away,” he said. “I don’t think they will, because Pinnacle is doing so good.” Indeed, Pinnacle has seen its fortunes rise over the past year as it exited the horseracing business and focused more on its casino operations. For the second quarter ended June 30, Pinnacle reported net income of $26.2 million (31 cents per share), compared with net income of $9.7 million (12 cents) the like period a year ago. Revenues were $160 million vs. $199.5 million. Analyst Harry Curtis of Robertson Stephens expects the company to see long-term earnings growth of 15 percent a year over the next three years, according to a report he released in August. In 1999, Pinnacle sold Hollywood Park to Churchill Downs, and earlier this year the company sold its sole remaining racetrack in Phoenix. After the sale of Hollywood Park, the company changed its name to Pinnacle Entertainment and became strictly a casino owner. Pinnacle was started in the 1930s, and focused on racetracks until the late 1970s when it bought three Boomtown casinos. In 1998, with a new management team on board, officials decided to strategically shift course from horseracing to casino gaming. “It was a better opportunity for shareholders,” Hinckley said. “It’s more of a growth industry.” Since 1998, the company has expanded its casino offerings. It now has casinos in Nevada, Louisiana, Mississippi and Argentina. The company is also in line to receive a third gaming license from the state of Louisiana, the final license to be issued in the state. If Pinnacle is awarded the license, it will open a casino in Lake Charles. Harveys operates casinos in Nevada, Colorado and Iowa. Both companies must be licensed by states in which the other is licensed before the merger can be approved. Hinckley said he expects the merger to close in November or December. Analysts polled by Zacks Investment Research give the company promising ratings. Two analysts rate it a strong buy, two a moderate buy and one a hold. The mixed reviews are in part due to the uncertainty of the impending merger. Crawford of B. Riley rates the stock “market outperform” based on its buyout price. “We like the company, but the upside is kind of capped,” he said. Shareholders are also likely to get an additional $1 for each share when Pinnacle sells 97 acres it owns in Inglewood to Casden Properties for $63 million in cash, a deal expected to close by the end of this month. “It’s a pretty attractive spread,” Crawford said.

Orange sales in Ventura County are so bad this year, citrus growers are giving their crops away. It’s such a problem for citrus farmer Pete Becerra that he is running an ad in the Penny Saver that states: “Free oranges at Becerra Ranch. You pick. Bring containers.” “Money wise, it’s really hurting,” said Becerra, 71, a retired civil service worker who owns orange groves in Piru and Fillmore. Though he’s made money on his crops in the past, he’s not earning anything this year for his oranges, and will be forced to dip into his savings account to pay his mortgage and other expenses. “I was relying on the oranges to make money,” Becerra said. “I’m going to lose.” Becerra is among hundreds of Ventura County farmers who will make little or nothing from their crops this year. Overproduction, overlapping crops, weather conditions and competing markets across the globe are among the reasons why Ventura County growers are being forced to seek alternative ways to unload the excess, said David Buettner, chief deputy agricultural commissioner for the Ventura County Agricultural Commissioner’s Office. “It’s a huge impact on many of them,” Buettner said. “If you have years like this where you have deep losses, marginal profits for the next year may not be enough to bring them up to a point of profitability. Those people who may be having difficulty now in making ends meet may find it more difficult to stay in business.” In Ventura County alone there are roughly 13,300 acres of Valencia oranges and about 1,100 acres of navel oranges, according to the Ventura County Agricultural Commissioner’s annual crop report. Because this is the middle of the season, it is unsure at this point how many millions of dollars will be lost in orange sales, said Claire Peters, spokeswoman for Sunkist Growers. “All I can say is that it’s not going to be a good year,” she said. The Valencia is a summer fruit, and the navel is a winter fruit. Navels typically come in December, January and February, with the Valencia coming in around April and growing through the summer. The current problem stems from late navels, caused by last year’s weather conditions. The navels are holding longer, thus competing with the beginning of the Valencias. “If you look at consumers’ choice, they’ll pick navel over Valencia,” said Nick Sakovich, a farm advisor who specializes in citrus research and education for the University of California Cooperative Extension. Competing markets, too, are compounding the problem. “There’s just a large supply of oranges worldwide,” said Peters, who pointed out that Australia is also producing a large amount of navel oranges for eager consumers. “There’s a lot of competition now that didn’t used to be there.” Summertime is also a huge season for fruit in general. Melons, plums, peaches, pears and other soft fruit are bountiful at this time of year. “You’ve got a wide array of summer fruits to choose from, in addition to oranges,” Peters said. “(Though it may be bad for orange growers), it’s good for the consumer because they’ve got a much wider variety of choices.” So, how are orange growers going to deal with losing money this year? “There’s no obvious good answer,” Sakovich said. There are a lot of things farmers may try, such as growing alternative crops like mandarins. Blood oranges or hybrid grapefruits may also generate some money to help make up for the loss of orange revenues this year. Experts in the industry are looking at alternative marketing techniques. Finding new distribution outlets to sell the oranges may also help, such as farmers markets, roadside stands or mail order. “Whatever it takes,” Sakovich said. There’s also the problem of flourishing fruit trees. Oranges cannot stay on the tree for too long because they sap energy needed for future crops. That leaves many farmers with the problem of harvesting the fruit. They can hire pickers, but that costs money they don’t have. Farmers can offer the fruit to the public for free, but then they are faced with liability problems if someone is injured while picking. Allowing the public to harvest free oranges is also risky because they can damage branches by picking the fruit incorrectly, or step on root rot and then spread the disease to other trees. “It’s a bad situation,” Sakovich said.

founded by a husband and wife team, Swingset press has realized strong Growth By coming up with Products for ‘tweens’ who have sizeaBLE allowances and little ELSE to spend it on except themselves Ron and Iris Solomon are on a hunt for cool. Since publishing their first children’s book in 1997, the founders of Encino-based Swingset Press have edged into the “tween” market (kids aged 8 to 12, sandwiched between teens and younger children) with phone books and secret journals. It’s a finicky age group that has money to spend provided they think the product is cool. So far, the company seems to have achieved a high coolness quotient. In its short existence, Swingset Press has gone from 1997 revenues of $60,000 to $250,000 last year, and it’s projecting revenues to jump to $1.5 million this year. “A lot of it’s the cool factor,” Ron Solomon said. “The ideas come to me and if it pushes the cool button, then we look into it.” Swingset Press’s products include four main books, which include the “My People” phone book and the “Ultra Secret Stuff Journal,” plus five accessories for the “My People” phone book. The books all retail for between $10 and $20. The couple started the company while both were on break from their careers. Iris Solomon had been a marketer in the post-production business and Ron was a former television sitcom writer and producer. The two pooled their skills for the new business, with Ron focusing on the creative side and Iris on the sales and marketing side. Knowledge of the market The tween market was a natural for them. Much of Ron Solomon’s background is in writing for shows appealing to that age group, such as “Saved By the Bell” and “California Dreams.” He transferred his understanding of what the young market watches on television to what products they would buy. “We found this niche and didn’t realize it at first, but now we want to expand on that,” Ron Solomon said. “(Tweens) have big allowances and nothing to spend their money on but themselves.” Originally, the company targeted younger children. The couple’s first product, “My First Phonebook,” was inspired by their son, Jacob. In 1997, he was 3 years old and wanted to call his grandparents in Florida. He couldn’t read, but knew his numbers. The idea for a phone book with numbers and photos rather than numbers and names could solve the problem, his parents realized. “We looked at each other and said, ‘That would be a great product,'” Iris Solomon said. Later that day, Ron began designing phone books for young children on his computer. He went to Kinko’s after putting a preliminary book together and printed 2,000 copies. The pair took out a $20,000 loan to get started and headed to the Los Angeles Gift Show with samples. They sold orders to 35 stores.”Everybody liked who we were and the values of the product,” Ron said. One of those first stores to order the product was Adele’s II, an Encino specialty gift store. Owner Doris Hurwitz said she liked the book immediately. “It was cute for kids to associate a picture with a person they wanted to call,” Hurwitz said. “When the second book came out (‘My People’), it was a natural that we would carry it because the first book sold so well.” With stores reordering more copies of “My First Phone Book,” the Solomons hired sales reps to drum up more business nationwide while they turned back to the creative side. “We enjoy creating products that help kids,” Iris said. “It helps build their social skills and self esteem. And there’s an independence factor.” The next product, “My People,” was geared at an older audience and hit store shelves in 1998. The books allows kids of the tween age group to put pictures, phone numbers and e-mail addresses, as well as other information such as a hobby or astrological sign, on a separate card for each friend. A binder holds the cards together and allows kids to take out old friends and add new ones easily a common activity among a group that falls in and out of friendships at a rapid pace. Before coming out with “My People,” Iris Solomon did some market research by standing in front of Target and other stores, asking tweens and parents on their thoughts about the book. She took four different designs to fourth-grade classrooms and polled the students. So far, Swingset has sold nearly 65,000 copies of “My People.” Since first rolling out the books, Swingset has added different sets and colors of cards, so that kids can sort their friends by camp, school sports, traveling and school. Black-light diaries The second book allowed Swingset Press to expand into larger chain stores such as Dillard’s and the Store of Knowledge. The company has targeted upscale and specialty toy stores rather than discount stores like Toys ‘R’ Us, which they believe will hurt the products’ image and prompt specialty stores to stop selling them. Swingset’s newest product has so far been the best seller. “My Ultra Secret Stuff Journal,” which began selling in February, appeals to 12-year-olds who want to write about their latest crush without letting their brothers or sisters read about it. Kids write on white paper with an ultraviolet marker that can only be read under a black light, which comes with the journal. Hurwitz said the journal has been by far the best selling of the three books at her store.

Optimum Nutrition Inc., a sports nutrition supplement manufacturer, runs the same ad offering free samples of some of its products in four different exercise magazines, but at least 75 percent of the responses it gets come from only one of them: Joe Weider’s Muscle & Fitness. “They’ve been around for a long time, and the name Weider is heavily known,” said Jennifer Whitehead, advertising director for the Aurora, Ill.-based company. “That’s a big deal.” Thanks to Joe Weider, the godfather of bodybuilding, and a good measure of marketing savvy, Woodland Hills-based Weider Publications is outpacing many of its competitors in circulation and advertising revenue. For the second half of 1999, circulation for Shape, Weider’s fitness magazine for women, jumped to 1.5 million, up nearly 33 percent from the year-earlier period. Men’s Fitness, a publication geared to exercise enthusiasts of all kinds, saw a 51 percent boost in circulation to 530,647 for the same period, according to the Audit Bureau of Circulations. By comparison, Women’s Sports & Fitness, a Conde Nast magazine that competes with Shape, recorded a nearly 10 percent drop in circulation in the second half of 1999 to 550,232 readers. Men’s Journal, a Wenner Media publication that also targets the active lifestyle, recorded a 3.6 percent increase for the period to 575,952 readers. Readership for Weider’s Muscle & Fitness did not grow quite so strikingly. For the second half of 1999, the magazine’s circulation rose 4.6 percent to 477,013, but the publication still outpaced most of its closest competitors, with the exception of Outside, published by Mariah Media, which recorded a 5.5 percent increase to 558,912 for the same period. What’s in a name? Although the Weider magazines target different readers with somewhat different slants, all three share two things in common a focus on health and fitness and oversight by the company founder. “The Weider name is a strong name,” said Jim Swords, a spokesman for Twinlab, a nutritional supplement maker. Although Weider’s name is not as prominently featured on the cover of Shape as it is on the men’s magazines, because its female readers are not likely to be as familiar with the bodybuilding icon, his influence and strategy of providing highly useful information is clearly felt, said Carolyn Bekkedahl, Shape’s senior vice president and publishing director. “We are published by a health-and-fitness company, so having that heritage, we know first when trends are happening,” Bekkedahl said. Several years ago, the 18-year-old publication began focusing its attention less on the exercise buff and more on the market of relatively young, affluent women who have made exercise an integral part of their overall lifestyle, just as they do work and social activities and pastimes. “What we speak to is how she can shape her life, not just her abs and butt,” said Bekkedahl. “In marketing ourselves this way, we become relevant to advertising categories across the board.” Indeed, the editorial lineup in the maga zine’s September edition mixes features on weight loss and getting great “glutes” with articles about fashion for the office, beauty and cooking. As a result, the magazine attracts advertisers that run the gamut from cosmetics makers to car companies. “Shape is running 20 percent ahead of last year’s ad pages, year to date,” Bekkedahl said. “(The increase) is across all categories.” Jump in revenues As with Shape, Men’s Fitness has benefited from the broader approach. Ad revenues jumped a whopping 41 percent to $4.7 million for the first three months of 2000, from $3.3 million in the like prior-year quarter, according to Competitive Media Reporting. But if Men’s Fitness has grown by broadening its market appeal, Muscle & Fitness has done it by sticking to its core. Each issue of the 60-year-old publication offers up a comprehensive guidebook on weight training, with exercise routines and diet regimes. The experts featured in the magazine, from Mr. Olympia Ronnie Coleman to Arnold Schwarzenegger, who offers up a monthly column (as does Weider himself), have helped the publication attract readers from all walks of life, not just bodybuilders, Deters said. “Every once in a while, I’ll pick up a golf magazine,” he said. “It’s got all the big names. Is this magazine written for other professional golfers? No. But when I buy a golf magazine, I want to learn from the best. Just like a Muscle & Fitness reader. They want to learn from the best.” The credibility behind the magazine is not lost on advertisers, who, for the first three months of the year, contributed to a 10 percent increase in advertising revenues at the title to $11.4 million, according to Competitive Media Reporting.

Chatsworth-based North American Scientific Inc. is gaining admirers on Wall Street. With the company’s recent moves to branch out from its core business of radiation therapies used to treat prostate cancer, analysts have in recent months boosted their ratings and investors are taking note. The company’s stock has shot up from $9 a share in February to around $22 a share through most of August. While the company continues to see revenue growth of around 30 percent a year, analysts say the recent stock boost comes from North American’s announcement earlier this year that it would acquire Theseus Medical Imaging, maker of apomate, a product that when fully approved is expected to determine a patient’s response to cancer chemotherapy or early signs of rejection of a heart transplant. “The Theseus Imaging deal put us on the radar screen for Wall Street,” said L. Michael Cutrer, the company’s president and chief executive. “From a market perspective, it’s expected to be a multibillion-dollar industry.” Apomate is now in clinical trials in the U.S. and promising early results were published this summer in Britain’s top medical journal, The Lancet. The chemical is injected into the patient and, using standard hospital imaging equipment, shows the extent of cell damage in a patient’s heart or other organs, allowing doctors to gauge a patient’s status within hours or days rather than the weeks or months the process can take now. “It’s all new and could change the way medicine is practiced,” Cutrer said. “We believe it will possibly be available at the end of next year for organ transplants.” The three analysts polled by Zack’s Investment Research rank North American a strong buy. “The stock’s performance is really tied to apomate,” said John Calcagnini, senior medical device analyst for CIGI World Markets. “In the long run, the real ace in the hole, the blockbuster, is apomate.” Analyst Charles Olsziewski, senior vice president of research at PaineWebber Inc., upgraded the stock to a buy in June with a target price of $32 for the next 12 months. “One reason is the consistent and steady growth in their core business,” Olziewski said of the upgrade. “But now they are entering their next phase of diversification with this acquisition. Apomate is very significant.” Cutrer said the company expects to complete the acquisition of Theseus by late September. While Wall Street applauds the diversification move, North American is also seeing continued growth in its core products. The company reported net income of $1.4 million (21 cents per share) for the third quarter ended July 31, compared with net income of $981,000 (14 cents) for the like period a year ago. Revenues were $4.5 million vs. $1 million. Over its 10-year existence, North American has become a recognized player in the field of radiation therapies for cancer and other diseases. Cutrer started the company in 1990 as a maker of standardized radiation products sold to hospitals and medical laboratories for use in nuclear medicine. The radiation products are also used in the industrial and environmental sectors where they can measure the thickness of materials or the geological composition of a certain geographical area. In 1997, North American began its move into the therapeutic radiation market when it was granted FDA approval to make brachytherapy products used in the treatment of prostate cancer. Brachytherapy products are radioactive seeds or pellets, which are implanted into the prostate with thin needles to treat cancerous tissue. The company’s brachytherapy product line is now the biggest revenue generator for North American and the reason for the company’s 30 percent average growth rate. “The company has been very successful in the brachytherapy market,” Calcagnini said. “They are generally regarded as experts in the development and manufacturing of radioactive isotopes for multiple indications.” The company is, however, facing increased competition in the radioactive seed business from new entrants to the market Syncor International Corp., UroMed Corp. and UroCor Inc., according to Olsziewski. North American controls between 10 and 15 percent of the brachytherapy market. Cutrer said the competition has yet to mount any significant threat to North American’s market share. “It remains to be seen,” Cutrer said. “We think we’re well positioned for the increased competition. We have a high profit margin on our products.”

Commercial mortgage lenders are having themselves a worry-free summer this year. According to the most recent data from the California Mortgage Bankers Association, the statewide delinquency ratio for commercial real estate loans dropped to a minuscule 0.2 percent in the second quarter. The delinquency ratio was an already extremely low 0.4 percent in the first quarter, and was the same during the second quarter of 1999. In dollar terms, the low percentage means that as of June 30, 2000, out of $22.2 billion in outstanding commercial loans in California, loans representing a paltry $38 million were two or more months behind in payments. “This is an extremely healthy commercial real estate market,” said Peter Ulrich, a consultant with the CMBA. “There are no signs of overbuilding, and that means that mortgage lenders are not seeing any write-offs.” According to Ulrich, the delinquency rate for L.A. County mirrors that of California fairly closely, given the large size of the local real estate market. In fact, one $25 million loan for an unspecified marina project in L.A. County (the CMBA does not disclose details about individual loans and lenders) accounts for the bulk of the $38 million in delinquent loans in California. If not for this particular loan, the delinquency ratio would be pretty much nil. As of June 30, out of $3.7 billion in warehouse and industrial property loans statewide, not one payment was more than a month late, and out of $7.2 billion in loans for apartment buildings, just $300,000 was in arrears. Thus far, the longest economic expansion in U.S. history has not led to speculative overbuilding as good times did during the expansion of the 1980s. “We are seeing very little new construction, specifically in the large metropolitan areas,” said Ulrich. “The new projects that are being planned now are in many cases still a few years away from coming online, so we expect that the low delinquency ratio will stay low for the foreseeable future.” In Los Angeles County, in spite of strong job growth and business expansion over the last few years, commercial building has remained relatively flat. After a big jump from 1997 to 1998 in the value of commercial and industrial construction permits issued for L.A. projects, the last two years have seen only modest increases in the value of such permits. With the prospect of an economic slowdown looming, developers are apparently not in the mood to repeat their past mistakes and go on a building binge to take advantage of the tight market.

You’ve probably heard about Nicholas Applegate Global Technology fund (up 494 percent in 1999), Van Waggoner Emerging Growth fund (up 291 percent in 1999), and PBHG Technology and Communication fund (up 244 percent in 1999). Heroes all. Such stellar performances tend to get noticed. But you may not have heard much about American Century New Opportunities fund. Sadly, although it was the 28th-best performer in 1999 in a fund universe that now numbers over 11,000, and although it returned 148 percent for the year a return most people would find pleasing few people know much about it. I read that as a curious indication of our jaded expectations these days. In fact, the fund, which specializes in small-growth-company investments, ranked in the top 2 percent of its category over the last three years. It also pulled in a top Morningstar ranking of five stars, and then closed to new investors to avoid burying its team of three managers under suffocating tons of new cash. Which is why I went to visit with them. I wondered what it felt like to be managing a portfolio that was 70 percent invested in technology stocks in a market that doesn’t merely beat up disappointments but eviscerates them. Any company that misses a step or loses its manic following can lose a third, a half or more of its value virtually overnight. On the other hand, no price is too high for any stock that receives the market blessing. Listen. Are you nervous? Not particularly, Chris Boyd, John Seitzer and Tom Telford told me in one of American Century’s “war rooms” in Kansas City. The three work as a team managing the fund. “A lot goes back to the way we invest,” Boyd said. “We make a screen of the entire (stock) universe, looking for companies that have a high and accelerating growth rate. Right there we know they will probably do better than most stocks.” He is careful to point out that their method, which is used throughout the firm, emphasizes growth in sales, profits and margins actual operating results. While they are “momentum” investors, they are watching fundamental momentum rather than the momentum in share price and volume that has become popular in recent years. Their method dates back to James E. Stowers Jr., who founded the firm in 1958 and became one of the pioneers of growth stock investing. But these days, how is it possible to follow all that is happening in technology? “All the technical gibberish really can be translated into numerical terms,” Seitzer said. “We don’t need to know how a router works; we only need to know the advantage of the product. The proof is always in the numbers.” Added Boyd: “We don’t try to project (a product, sector or industry). We look at the numbers. Then you start to see new industries emerge.” I asked if they could give a concrete example. “How about cargo pants vs. telecommunications spending?” John Seitzer asked. Starting with their database of companies showing accelerating revenues and earnings, he explained that they asked three basic research questions: Why are sales and earnings accelerating? Is the acceleration sustainable? What are the risks? Cargo pants could enjoy expanding sales, he explained, but they were a fashion item that anyone could produce in an instant. PMC-Sierra, on the other hand, was a chip manufacturer with 70 percent to 80 percent gross margins and 40 percent net profits that built products with a life cycle of three to 10 years for the telecommunications industry. So, will technology always be the focus of their portfolio? “We’re always looking for new names and themes. Then the portfolio will get positioned on what we find,” said Boyd. “But technology is still dominant. We did start to pick up energy services about a year ago, and I have to say that we don’t know where we’ll be in two years. What’s important is the one thing that doesn’t change: Money follows earnings. It did 20 and 30 years ago. It does now. But now the information flow is much quicker. Our challenge is to keep up with the information flow and to always funnel it back into our process.” Savings Advice Question: I am 33 years old, with about $26,000 in a retirement fund. The fund is managed by a state-run deferred compensation program. I contribute $60 a week to this fund. I have my money divided into 40 percent guaranteed funds, with a return of 6 percent, 40 percent in the PBHG Growth fund, and 20 percent in the Janus Twenty fund. I have exactly 13 years to go before I’m eligible to retire. I also have a home mortgage of $54,000 at 7.5 percent, a second mortgage of $10,000 at 13 percent, and my home was recently appraised at $100,000. I have an auto loan at 9.5 percent with a $17,000 balance and a credit card balance of $2,500 at 18 percent. I earn about $60,000 a year. My credit rating is below average. What can I do to improve my current situation and save for the future? T.W., Akron, Ohio Answer: With a little time, research and patience, you can reshuffle your obligations and start saving a larger portion of your income. One example should give you an idea of how powerful some shuffling can be. Your 18 percent credit card debt costs you $450 a year in interest. Assuming you are in the 28 percent tax bracket, you need to pay federal income taxes of $175 on $625 of income before you can pay $450 of non-deductible interest. Knock out the credit card debt, and you’ll be able to put that $625 into your deferred compensation program without missing a dime. You have similar potential in your second mortgage with its 13 percent interest rate. I don’t know where you did your shopping for your current loan, but 13 percent is over the top when it comes to secured lending rates. I suggest a visit to your credit union where you should be able to convert your second mortgage into a home equity credit line at 9 percent to 10 percent and the credit line should be large enough to take out the credit card debt. You can do some research without leaving home. I found by visiting www.banxquote.com, for instance, that the average home equity line of credit in Ohio was 9.5 percent. You can also get information at other sites such as www.quicken.com. Once you’ve paid off the credit card, I suggest that you set up a budget and follow it using Quicken or Microsoft Money. You’ll know where your money is going. When you plan what you spend, you’ll have a better chance at paying your new credit card charges every month. Scott Burns is a columnist for The Dallas Morning News.