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Economy inching up, merger activity sees uptick

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San Diego’s leading economic indicators rose for every month this year. High-tech firm Cymer, banks and life-science real estate firms were among those that merged, the “too big to fail” bank bill faces opposition from different quarters and more small businesses are investing in commercial real estate.

Economic indicators
Sharp increases in building permits and local stock prices, modest gains in consumer confidence, more help wanted ads and the national economic outlook all added up to an increase for the ninth straight month in May in the leading economic indicators for the county. The University of San Diego’s Burnham Moores Center for Real Estate indicators for May saw a 0.6 percent increase. Economists projects good growth through the rest of 2013 and into early 2014.

Mergers & Acquisitions
Cymer shareholders approved a merger with Netherlands-based ASML in February. Cymer has 1,200 employees and ASML has 8,500 employees. ASML acquired Cymer’s outstanding shares in a transaction valued at $2.6 billion.

In April, Coronado First Bank and San Diego Private Bank completed their merger, and the combined bank will operate under the name of the latter. The merger puts their combined assets at $300 million.

Capstone Investments closed shop after merger talks with Ascendiant Capital Markets collapsed. The stock research boutique firm began operating in 1995.

BioMed Realty merged with Wexford Science & Technology, making the latter a wholly owned subsidiary of the former. The combined firm will develop life science real estate for academic and medical research organizations, with specialty expertise in urban development and redevelopment of life science real estate. Wexford’s worth at close of the transaction was $672 million.

'Too big to fail' bank legislation
Bipartisan efforts from two senators have led to a proposed bill that aims to rein in banks with $500 billion or more in assets, deemed “too big to fail.” However, the bill faces opposition from bank CEOs and backers of a trade agreement between the United States and European Union. The bill’s backers say there’s a dire need for such a legislation, because the Dodd-Frank Act does not protect U.S. taxpayers against future bailouts. So called "megabanks" such as J.P.Morgan Chase (NYSE: JPM) and Citigroup (NYSE: C) would need a 15 percent capital requirement while banks with $50 billion to $500 billion would need 8 percent capital requirement, according to the bill’s proposal.

Home prices bubbling again
Home prices rose 14.7 percent over the last year in the county, 2 percentage points above 20 other cities. Mid-market homes priced in the $400,000 range around the county have begun receiving multiple offers, given their paucity, while upmarket homes above $2 million are not seeing as much activity. Pockets of the county -- certain micromarkets -- which have in-demand schools are witnessing a seller’s market, whereas other areas continue to be slow.

Small businesses investing in commercial real estate
As an indicator of their confidence in the economy, many small businesses that have weathered the recession and are seeing business bounce back have begun to invest in buying the facilities they use for office, warehouse and factory space. Lenders such as CDC Small Business Finance have seen an uptick in the number of small businesses that have begun applying for commercial real estate loans through the Small Business Administration’s 504 loan program.

-Compiled by Padma Naggapan.

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