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I was at the Puerto Rico ICSC show, and while it's the smallest event we attend every year, the show, with only 259 in attendance, was upbeat and productive for this extremely cliquish group of dealmakers. As is the case at most shows, for two days most of the attendees wined and dined at various parties (I have to thank Thor Equities and Larry Campbell for invites to two great dinners) and all did a great job of networking, which in reality is the ICS

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

C's major strength. What I found interesting is that retail sales are down in PR between 3% and 5% (depending on who you're listening to since they added a sales tax on the island) but rental rates are up. An interesting combo. Anyway, for the three days I was there, the low in temperature was 72 and the high, 86 degrees.

On the day we left PR, I complained to Ann about it being too hot and after we landed back in Jersey, I started complaining about th

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

cold. I guess Ann' s right about me being a compulsive complainer. Oh, I've been coming to this show for about five years and every year, three to six NEW retailers from the states come to the event who hear how great the PR market is and hope to open the island for their companies. After doing some primary investigation, discovering how high the rents are and seeing the scarcity of space, 60% to 70% drop the idea of opening in Puerto Rico. I can vouc

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

h for these facts: Rents are high and vacancy is low, worse than California. But what makes it all worthwhile is high, high sales.

Going from the beauty and great climate of PR, I went to the Chicago ICSC show. (The small one, not the biggie that occurs in Chicago every October.) While attendance was respectable at 1,183, the weather sucked. It started snowing when I arrived and the wind chill factor was -15 degrees at its worst. Driving conditions, b

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

cause of the horrific snow, were dangerous at best and the starting day for the show was a mini blizzard. But dealmakers are dealmakers and there was an excellent turnout for the cocktail party. (But the food was blah, since it was a "non-sponsored" event.) But in spite of the poor food and bad weather, the ballroom filled up with happy dealmakers. For most in attendance, 2007 is stacking up to be a good year.

The next morning, the round table discussi

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

ns and seminars were jammed. This is a group that really wants to learn PLUS do deals and this was shown when later that afternoon the Dealmaking area was jammed for three hours with retailers, brokers and developers saying, "Do I have a deal for you." Overall, anyone who attended couldn't complain.

I didn't attend the L.A. show in California, but Alyson did, and she said the show with 801 dealmakers present was "OK," but not great. The cocktail forma

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

t for this show, since it was a one-day event, was different than other shows in that the "cocktail" party was mixed with the actual dealmaking. So you visit a booth and then eat, drink and try to be merry. (Puerto Rico has a cocktail party the night before the show AND then has food as part of the dealmaking. I guess they love to eat.) Everyone appeared upbeat, and there were about 100 exhibitors with most in attendance staying past the closing bell o

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

4 p.m., so chalk up another successful dealmaking

I don't understand the economy, since some days the economic reports are great and the next day dreadful, but I have not been to an ICSC show in years that hasn't been good. It's almost scary, and I don't expect that to change in the near future. But now that I'm not being a contrarian, I guess a recession will start.

On a different note, we (TKO) specialize in leasing and selling "problemed" properti

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

es. (Or "value-added," as they are called today. But if you have a great center for lease or sale, feel free to call. We'll be glad to work on it.) Two of the properties we've been working on that are for sale are real "challenges," and both now appear to be going under contract, BUT the reasons being are 1) the centers are being sold cheap ($12 psf to $16 psf and, more importantly, 2) in both cases the buyers had a retailer in place to lease the vacan

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

big box before entering into a contract. Doesn't take Einstein to understand if you can buy a center for $13 psf, put another $25 into TI and then have a mini-anchor or anchor of 50,000 sq.ft. to 75,000 sq.ft. willing to pay $6 rent, net, not only are you improving the CAP rate immediately, but you just started on the turnaround for the rest of the center. I've noticed this as a trend over the last year or so and it seems it's becoming more common. Yo

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

have a second generation anchor, then go buy a center. Used to be first you buy the center, then you find the anchor. All these "pocket" tenants are either discount (usually low-end) or entertainment-oriented and have difficulty finding locations at rental numbers they can afford. By having a "preferred" developer (If CVS can do it, why not mini-anchors?), they can control their growth better than just making calls looking to lease space. I think it's

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

great. I'd love to have this type of relationship with some tenant. I could make a good buck.

Oh, I had an "interesting" phone call the other day. I get a call from another broker wanting to know if I can help his client sell a 16-acre parcel that he recently got rezoned for retail. I was told it was an "A" location and leasing would be easy. My first question was, "Why are you calling me?" I've learned over the years if it's easy and profitable, they

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

don't call me. I'm then told that they tried to sell the property to a major developer I'm friendly with and were "insulted" by their offer. I replied with, "Why not try and sell it to someone else if it's that good?" and was told they "like" this particular developer. Since it was an outright sale, that didn't make sense. The color green is the only thing anyone should care about and they wanted my help to sell to that developer and that developer on

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ly. I was confused.

Long story short, it costs the owner about $25,000 a month to carry the property and the developer offered $5,000 a month for a year for an option. I said that makes sense to me. What's the problem? In "the good old days" when I worked for Arlen Shopping Centers in the '70s, we'd go out and get some farmer to give a one- or two-year option for $200 a month on 20 to 100 acres. Build in inflation and it seems things haven't changed m

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ch in 30 or 40 years. The only problem I see is feeling insulted. (It's the sellers' problem, not the potential buyers'.) You don't have to accept an offer, but at least appreciate that they made one. Think about it: We must offer a location to 60 to 100 retailers before any express real interest and make an offer. At least with an offer we have a starting point and this buyer did make an offer. Don't be insulted, be glad. The whole discussion didn't m

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

ke sense to me, so I turned down the assignment. Josh was in my office while this conversation was being held and afterwards couldn't understand why I didn't take the assignment. "We could make a commission," he said. (He's greedy, which is good for a broker, but he's young and doesn't understand.) I tried to explain we're a small company and it just doesn't pay to work on projects that probably never will be made. Pick your assignments and then make

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

'em happen. It probably took me 10 years in brokerage before I understood this simple rule. Hopefully, I can teach it to him quicker.

Oh, another trend I've noticed is SOME, not all, CAP rates are moving upward. It appears some sellers are now realizing that not all property is created equal, and while prime locations can still command 6 1/4% CAPs (California is at 5 to 5 ?%.), secondary or locations with short-term leases and non-credit tenants are n

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

w going for 7% to 8 ?%. Maybe this is a trend that will continue. (Who knows? It's a pure guess.) Some of the "younger" generation people contend I don't understand the "new" economics. I contend I do and they make no sense, especially if and when a recession hits.

Changing the subject. Besides taking forever and a day for a deal to close, I think the boom of our industry for the last eight years has gotten a lot of people to become either inconsiderat

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

e or unprofessional. Besides the rudeness of NOT returning phone calls, I've noticed that a number of companies are either sending or signing an LOI (which is never binding on anyone) and then when the other party follows up, they don't respond. Typical of that is we recently received an LOI from a tenant on a property we're leasing. We, within hours, sent back a counteroffer. We then waited a day and phoned their real estate rep. Didn't receive a retu

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

n call, so we e-mailed the next day. Still no response. We then e-mailed and called again and again, no response. We called the VP of the company, got voice mail and explained our problem. Still no response. Over an eight-day period, we called and e-mailed at least seven times. Yes, I realize that the deal is probably dead, but why not have the consideration to either return the call or reply with an e-mail telling us to get lost. Purely unprofessional

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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