SBA hopes loan deals rebuild black community’s faith

Historically, African-American business leaders have felt their community is less likely to ask for loans, because in the past they have been less likely to get approval.

The U.S. Small Business Administration is starting to change that perception. And it has the statistics to prove it.

In New Jersey, approvals are up 154 percent in the first four months of fiscal year 2018. Loan amounts have increased by 40 percent already.

That puts the SBA on pace to approve 132 loans totaling $21 million, compared with 85 totaling $17.8 million a year ago.

To date, New Jersey has approved 33 loans for $5.2 million, compared with 13 loans for $3.7 million for the same four-month period.

SBA New Jersey District Director Al Titone said in a statement Thursday that, while the news was encouraging, there is more work to be done.

“This tells me that, despite our advances, the SBA New Jersey district office needs to continue its outreach to lenders and borrowers alike to make sure they understand the possible opportunities they may have available to them,” he said.

“We’ll look to increase our participation with lenders and community economic development groups to provide more education and programs on credit repair and financial literacy so that loan approvals to the African-American small business community can continue to improve.”

A study from the SBA’s Office of Advocacy, using U.S. Census Bureau data, shows that 60 percent of African-Americans did not choose to apply for financing for their business because they assumed they would be denied.

At least 47 percent of white and 44 percent of Asian business owners feel the same way.

Recent studies and debates around the country increasingly focus on the root cause.

Some argue it is because there isn’t enough financial education and awareness in minority communities, while others blame the financial system — saying regulations and existing formulas for calculating credit ratings have allowed for prejudice to thrive.

While it is a little bit like comparing apples and oranges, this has been the case as well in the mortgage sector, according to another study released Thursday.

The investigation, done in collaboration with Reveal from The Center for Investigative Reporting and PRX, shows that Philadelphia metro area led the country in denying African-Americans loans for their homes.

The data collected showed that disparity to be true in portions of South Jersey as well.

U.S. Sen. Tim Scott (R-S.C.) unveiled a bill in August to require the federal government to vet credit standard used for residential mortgages, according to the article on Reveal.

Scott said he was calling for the vetting because the credit scoring model does not take into account factors that could be better metrics for housing, such as rent, utility and cell phone bill payments.

This has disproportionately affected the creditworthiness of minorities, he said.

The SBA’s report Thursday echoed similar problems of creditworthiness.

“In addition to being more likely to seek out multiple new funding sources in 2014, blacks or African-Americans and Hispanics were also more likely to demonstrate unmet credit needs than other groups (based on the percent of firms who established new funding relationships but did not receive the full amount of capital sought),” according to the report, prepared by SBA’s Alicia Robb.

“African-Americans were most likely to report unmet credit needs across every financing category. Most notably, 53 percent of black or African-American business owners reported not receiving the full amount requested from banks and other financial institutions, compared to 24.5 percent of white business owners,” the report said.

According to the SBA data, TD Bank approved the most loans, 12, totaling $580,000.

On the flip side, TD Bank was cited in the mortgage study as the largest lender, by volume, for 2015 and 2016, but the most likely to turn down African-American and Hispanic applicants.

The bank argued, using a defense that references a practice that led to the market crash a decade ago, that if it does turn down applicants, it’s to shield them from adverse results.

“TD Bank lends money with the confidence that our customers can repay their loans, decreasing the likelihood that a homeowner will become delinquent or face foreclosure,” the bank said in a statement to Reveal.

Banks have been criticized in the past for approving applicants who they knew could not make payments, which led to the market crash.

The SBA report Thursday highlighted gains in business lending but showed where improvements are still needed.

The largest loan total came from two approved loans at United Bank of Philadelphia, for $1.2 million.

Only 13 of the 21 counties in New Jersey had black-owned businesses that received loan approvals.

Essex and Union counties led the way, with six loan approvals for $1.3 million and $763,000 respectively, according to the report.  Others include Atlantic, Burlington, Camden, Gloucester, Hudson, Mercer, Middlesex, Monmouth, Morris, Ocean and Somerset counties.

John Harmon, president of the state African American Chamber of Commerce, is supportive of the loans, but remains critical.

“Although it’s encouraging, it’s still ridiculous,” Harmon said.

The state’s Economic Opportunity Act targeted known clusters of minority populations in the state, but the loans by the SBA miss those areas, he said.

“Essex County, you got six, that’s the larges concentration of black businesses and black folks in the state. And you have six loans,” he said. “The SBA needs to expand its partnerships to better leverage federal resources.”

Meanwhile, smaller loans are an increasing trend in order to help the SBA disburse greater quantities of loans.

“The trend toward smaller loans continues,” Titone said in a statement Thursday. “Between fiscal year 2014 and 2017, the SBA has not charged any fees for loans under $150,000.

“In order to continue the no-fee structure this year, the SBA lowered the loan amount for loans under $125,000. Small business owners throughout New Jersey, but especially in underserved communities, are benefitting from this incentive.”

Fees, Titone said, are an issue.

“Setting fees at zero effectively makes these loans cheaper for borrowers, encourages lending to small businesses that face the most constraints on credit access and creates lending opportunities important for underserved communities,” he said.

“Clearly, we are seeing positive results in the recent surge in loan approvals to African-American businesses in parts of the state, but we will strive to do even more to assist these businesses in preparing, and getting, conventional loans for their businesses.”

TD Bank: Mobile tech is top of mind for restaurants

Mobile technology growth and integration is one of the top priorities for restaurant franchisee owners and franchisors, according to a TD Bank survey.

According to the survey, more than half (59 percent) plan to integrate smartphone/tablet apps and/or mobile ordering, or develop a mobile app this year, while just under half (45 percent) plan to integrate a mobile employee scheduling/time tracking app.

The survey, conducted at the 2017 Restaurant Finance and Development Conference in Las Vegas, polled franchise owners and operators of quick-service and fast-casual restaurants. About 54 percent of respondents own or operate stores that are part of a national brand, 25 percent have an independent store and 20 percent have a store that is part of a regional brand.

When asked how mobile ordering has influenced their restaurants, respondents said it could:

  • Expand their customer base (55 percent);
  • Eliminate the need to hire more staff (16 percent);
  • Speed up food preparation, cooking and delivery (15 percent).

“In addition to the back-end benefits, mobile apps provide an opportunity for restaurants to communicate with customers in new ways by offering customized service and incentives that provide a more seamless experience and help encourage needed repeat business,” said Mark Wasilefsky, head of the Restaurant Franchise Financing Group at TD Bank. “We live in a mobile society in which consumers expect that ordering food ― like any product ― should be quick and easy. Smart franchise owners will take advantage of the latest technology to reach customers through their devices.”

Survey respondents also reported the biggest investment they’re planning for 2018 to stay ahead of the competition is location expansion (70 percent), followed by social media strategies to target Gen Z (56 percent) and customer loyalty programs (55 percent).

Mobile ordering is a huge influence for the way respondents think about their business, with 55 percent reporting mobile ordering could help expand their customer base.

Wyndham to sell European vacation business for $1.3B

Parsippany-based Wyndham Worldwide Corp. announced Thursday it has agreed to sell its European vacation rental business to Platinum Equity, a private equity firm, for $1.3 billion.

In conjunction with the deal, the European vacation rental unit has entered into a 20-year agreement to pay a royalty fee of 1 percent of net revenue to Wyndham’s hotel business for the right to use the “by Wyndham Vacation Rentals” brand.

The business has more than 110,000 units in over 600 locations in more than 25 countries, and operates more than two dozen brands, including, James Villa Holidays, Landal GreenParks, Novasol and Hoseasons. It generates approximately $750 million in annual revenue.

“Along with our planned separation and recently announced acquisition of La Quinta’s franchising and management businesses, this is another important step in the evolution of our Company,” said Stephen P. Holmes, chairman and CEO of Wyndham Worldwide. “Our European vacation rental brands deliver a great consumer experience, have high brand recognition in their markets and have delivered strong, consistent results. Our goal has always been to position them for continued long-term growth. We conducted a rigorous strategic review process that generated strong interest from multiple parties, and we were pleased to find the right buyer. We are confident that, as part of Platinum Equity’s portfolio, these businesses will have a bright future and will provide significant opportunities for their associates and business partners.”

Deutsche Bank and Goldman Sachs are acting as financial advisers, and Kirkland & Ellis International LLP and Dechert LLP legal advisers to Wyndham Worldwide. Financing for the deal will be led by Bank of America Merrill Lynch. Latham & Watkins is serving as legal counsel to Platinum Equity.

The deal is expected to close in the second quarter of 2018.

Bergman Group bullish on suburban office space

Michael Bergman, CEO and president of Bergman Real Estate Group, is bullish on suburban office space after accounting for all of his firm’s end-of-year lease transactions and capital improvement projects for 2017.

The Iselin-based privately owned real estate investment firm completed more than 100 lease transactions in 2017, totaling 350,000 square feet throughout its New Jersey office portfolio, with an aggregate rental value in excess of $37 million. The transactions represent a mix of new tenant long-term leases, and renewals and expansions of existing tenants.

“Our success in 2017 shows that the demand for suburban office space continues to strengthen in New Jersey,” Bergman said.

According to Bergman, deal highlights include a long-term lease renewal and expansion with Diagnostica Stago, an industry leader in the science of hemostasis and thrombosis, for 52,000 square feet at 5 Century Campus in Parsippany, and 25 lease transactions at 1099 Wall Street West in Lyndhurst, totaling over 48,000 square feet.

“Long-term renewals are a testament to the care and attention we pay to each of our properties,” Bergman said. “We are committed to maintaining and improving our buildings and increasing the value for our investor/partners and new and renewing tenants alike.”

According to Bergman, the office market continues to be driven by the demand for suburban properties which reflect the changing role of today’s working environments.

“A positive working atmosphere, with unique perks, services and amenities is now key for companies throughout New Jersey and across the country,” he said. “Tenants today are looking for more than just offices — they are looking for extra amenities which support an enhanced office environment supporting a ‘live, work and play’ lifestyle.”

Bergman Real Estate Group has incorporated many of these in-demand amenities at several of its properties, from lounges and shared conference rooms to unique features such as bike sharing programs, yoga/fitness rooms and game rooms.

In one of the most ambitious projects of 2017, Bergman Real Estate Group, in partnership with Time Equities Inc., invested $4.5 million into a capital improvement program at Century Campus. This three-building office complex features a dozen new amenities, including a state-of-the art business lounge with a staffed barista, coworking office suites, an art studio, media center, massage room and fully renovated common areas. Several more improvements to the interior and exterior are planned for 2018.

“We are looking forward to the year ahead as we continue to improve and enhance the services and amenities offered at our properties,” Bergman said.

Honeywell: Adamczyk to replace Cote as chairman

Morris Plains-based Honeywell’s CEO and president, Darius Adamczyk, will take over as chairman when current Chairman David Cote retires at the end of April, its board of directors announced Wednesday.

“We have a long track record of outstanding performance under a unified leadership structure in which the roles of chairman and CEO were combined,” said Jaime Chico Pardo, Honeywell’s lead director. “Following an evaluation of the strength of Darius’s character, the quality of his leadership and the likelihood that his service as both chairman and CEO will enhance company performance, the board concluded that Darius will provide decisive strategic leadership and strong execution of Honeywell’s significant portfolio change and deployment of our core technological strengths related to software, data analytics and the ‘industrial Internet of Things’. We are confident that our highly independent board and strong lead director role can provide the appropriate support and oversight of a combined chairman and CEO.”

“Darius has demonstrated the ability to lead decisively in his prior roles at Honeywell and, more recently, as CEO, where his strategic vision and clarity of purpose have been amply displayed. The flawless transition to Darius’ leadership over the past two years has played a major role in Honeywell’s continued outperformance. I have no doubt that Darius has the integrity, leadership attributes, skills and intellect to lead Honeywell successfully as chairman and CEO for many years to come,” said Cote, who was Honeywell’s CEO until March 2017.

Adamczyk was named CEO and president in March 2017, after serving as chief operating officer since early 2016. Before that, he was CEO and president of Honeywell Performance Materials and Technologies. Prior to that, he was president of Honeywell Process Solutions. He became president of Honeywell Scanning & Mobility in 2008 when Metrologic, where he was CEO, was acquired by Honeywell.

“It is a privilege and honor to be named chairman with the full support of Dave and our strong and capable board,” Adamczyk said. “I look forward to working with our outstanding board and leadership team and our talented global workforce to continue to accelerate Honeywell’s organic growth, drive margin expansion and provide increased value as the world’s leading software-industrial company. We are uniquely positioned to blend advanced software with leading physical products to focus on high-growth end markets.”

Vonage names SVP of client operations

Holmdel-based Vonage, a business cloud communications company, announced it has appointed Ken McMahon its new senior vice president of client operations.

McMahon will be responsible for Vonage’s customer experience, including service delivery, account management and customer care worldwide. He will also lead international operations and expansions for the company’s unified communications business.

“Vonage’s dedication to ensuring our customers have a delightful experience at every touch point embodies our core value of putting the customer first. Creating this senior leadership position demonstrates that commitment. We are thrilled to have someone with Ken’s track record of success lead this critical function for Vonage,” Kenny Wyatt, chief revenue officer, said.

McMahon has 20 years of experience in end-to-end customer experience. Prior to Vonage, he was at CenturyLink, where he held a number of senior leadership roles.

“I am thrilled to join Vonage to be a part of a team that is so clearly committed to putting the customer first and that continues to invest in creating a best-in-class experience at every stage of the customer life cycle,” McMahon said. “I look forward to working with the entire Vonage team to drive the ultimate customer journey.”

2 from N.J. make Fortune’s Best Companies to Work For

A pair of New Jersey companies have made this year’s Fortune 100 Best Companies to Work For list, according to the publication.

The two are health care provider Atlantic Health System, ranked No. 74, and drugmaker Novo Nordisk, ranked No. 95. Both companies celebrated their 10th consecutive year on the list.

“In order to provide great quality care for our patients, we must first provide the highest level of care for one another,” Atlantic Health CEO and President Brian Gragnolati said in a prepared statement. “Our inclusive culture enables us to fulfill our mission of building healthier communities.”

“I’m incredibly proud to see that Novo Nordisk has made the list for the 10th straight year in a row,” Corporate Vice President of Human Resources Maryellen McQuade said in a blog post.

Atlantic Health is based in Morristown, while Novo Nordisk has its U.S. headquarters in Plainsboro.

San Francisco-based information technology company Salesforce ranked No. 1 overall, followed by Rochester, New York-based grocery chain Wegmans Food Markets and Weston, Florida’s human resources software company Ultimate Software.

For the complete list, click here.

N.J. industrial real estate stays hot, NAI Hanson says

Commercial real estate firm NAI James E. Hanson said northern and central New Jersey’s industrial market finished the year strong, as leasing grew in the fourth quarter from the third and vacancy dropped impressively.

In its 4Q 2017 Northern and Central New Jersey Industrial Market Report, the Hackensack-based firm said 9.9 million square feet of industrial space was leased in the fourth quarter, up from 3.5 million square feet in Q3.

Middlesex County led the way, with 5.8 million square feet leased in the quarter, fueled by strength in the New Jersey Turnpike markets, NAI Hanson said. There are more than 7.1 million square feet of projects under construction in the county market, as well.

“The data behind the fourth quarter of 2017 perfectly illustrates the continued growth trajectory of the northern and central parts of the state,” NAI Hanson’s research director, Kristen Jost, said in a prepared statement. “We have seen year-to-year increases in asking rates and sales numbers, with subsequent decreases in vacancy rates as new construction struggles to keep up with red-hot demand.”

Meanwhile, the vacancy rate dropped to 3.7 percent, down from 4.2 percent in Q3 and 4.6 percent in the year-ago quarter. NAI Hanson said it was the first time in recent history that the rate finished a year below 4 percent.

Every submarket in the region had a vacancy rate in the single digits, the firm added, led by Brunswick/Exit 9, with a 1.1 percent vacancy rate, and Exit 8A, with a 1.6 percent rate.

“There has been significant talk regarding the current high pricing for industrial assets in the region, as leasing rates approach double-digits and the possibility of a price correction coming at some point within the next 12 to 18 months,” Jost said.

Sales volume for Q4 was nearly triple the rate seen in Q3, with more than $1.3 billion in total sales, up from $573 million. The per-square-foot price jumped to triple digits, closing the year at $118.75, up from $81.66 in Q3.

New fast-casual Japanese chain opens in Jersey City

Fast-casual Japanese chain Kobeyaki has taken root in Jersey City, its first location outside of New York City.

Colliers International NJ LLC Inc. represented Kobeyaki in the 1,706-square-foot lease at 525 Washington St. The landlord, MEPT Newport Tower LLC, was represented by CBRE’s Lon Rubackin.

Colliers’ Nancy Erickson, executive managing director; Kelly Bayer, associate director; and Jennifer Flores, associate, who are based at the firm’s Parsippany office, are exploring expansion opportunities in New Jersey for the restaurant.

In New York City, Kobeyaki has locations in Chelsea, Bryant Park, the Upper East Side and Madison Square Garden.

“Kobeyaki’s expansion reflects the keen consumer interest in fresh, clean eating in a fast-casual dining atmosphere in the metro area and well beyond,” Erickson said. “Restaurants, in general, have become highly active in recent years. Within that industry, the fast-casual sector is seeing significant growth, as time-crunched diners look for options that offer higher-quality options than traditional fast-food but still provide efficiency and affordable price points.”

Leadership organization announces 2018 award winners

The New Jersey chapter of the Association for Corporate Growth has announced the five companies and one executive it will honor at its 2018 Corporate Growth Conference and Awards event.

The business leadership organization said in a news release that it will honor the following five businesses at the event:

In addition, Rick Taylor, CEO and president of Konica Minolta, was named the recipient of the 2018 ACG NJ Corporate Lifetime Achievement Award.

“These companies distinguished themselves by their rigorous commitment to innovation, excellence and corporate growth,” Sally Glick, president of ACG NJ and principal at Sobel & Co., said in a prepared statement.

“The selection committee had a very difficult decision to make this year, with all the exceptional, high-quality firms that participated in this year’s nominating process,” MJ Jolda, co-chair of the conference and principal at CMO + Co., said in a statement.

(READ MORE from ROI-NJ on Repêchage.)

Taylor will serve as the keynote speaker at the event, which will be held from 7:30 a.m. to noon May 8 at The Palace at Somerset Park in Somerset. The other award-winners will also share insights and experiences, ACG NJ said.

“We are expecting a record crowd,” Glick said. “Every astute C-suite executive, business owner, service provider and others focused on corporate growth and the (mergers and acquisitions) community in New Jersey and beyond are going to want to hear how these leaders achieved such a high level of success.”

For more information on the event, click here.