PhillyDeals: PhillyDeals: Hill looks to the future

Billionaire investor

Warren Buffett

was on

CNBC

early Monday, trying to scare taxpayers into letting our government buy unattractive loans and bonds, from companies Buffett owns big chunks of, at prices he admits nobody but our government would pay.

"This is sort of an economic Pearl Harbor," Buffett said.

Unless you sell tanks and aircraft carriers, that sounds like a poor environment for optimists.

Yet in this same, tense climate,

David Richter

, president of global construction supervisor at

Hill International Inc.

, sat in his Marlton office, thinking big, looking ahead, and explaining his decision to take over a highly speculative project - the 1,500-foot-tall, 2.2-million-square- foot, $1 billion-plus American Commerce Center tower proposed for 1800 Arch St. - from its original developer,

Walnut Street Capital L.L.C.

"Right now is a tough market. It's going to take several years to build this thing," said Richter. "But it'll be an amazing skyscraper."

Richter is looking for some big company - maybe "a financial company" - to pick the building for its corporate headquarters. The tower would eclipse the nearby Comcast headquarters (which Hill helped build) as the city's tallest building.

"We've identified and have been talking to a lot of potential tenants," Richter said. He wouldn't name any.

He will talk money. "There's two components to every real estate deal - the equity and the debt," he said. These days that's maybe $1 of equity, from actual investors with their own money, for every $2 of debt, borrowed from banks.

Hill has some equity lined up, from the $7-billion-asset

Multi-Employer Property Trust

, a building-trades labor union pension fund that helped original developers

Joseph Grasso

and

Garrett Miller

(who is now working for Hill) buy the property last year. But loans won't flow until there are leases to pay them back. "Once we have sufficient tenants lined up, we'd talk to banks," Richter said.

Hill works with wealthy real estate investors around the world. In a report to clients,

Boenning & Scattergood Inc.

analyst

William Sutherland

compared the Philadelphia project to Hill's $500 million real estate development partnership in the United Arab Emirates, with investor

Makan Capital Group

.

Unlike Buffett begging from Washington, Richter doesn't have much to lose on Arch Street. "If the Center is not built, the land can be sold at a gain," noted Sutherland in a report to clients. The upside, if it does get built, is huge, for Hill, and for Philadelphia.

Cable companies such as

Comcast Corp.

have "largely neutralized the competition" from phone companies such as

Verizon Communications Inc.,

Moody's Investors Service analysts Russell Solomon and Neil Begley

told clients in a report.

The fight for dominance of video, phone and Internet is still in it early stages, and Verizon and the other

ex-Bells

remain "one of the biggest long-term risks" to cable dominance. But cable TV, by price cuts and clever marketing, is "meeting the challenge, taking far more share from the phone companies of late than they are losing."

Moody's also expects cable will get a windfall when antenna-using TV customers shift to cable this winter, after millions realize they can't get the new digital signals clearly after analog TV goes off the air.

The early evidence is in, and there's little proof that short-sellers hurt financial stocks before they were temporarily banned by U.S. and British regulators, says

Chao Chen

, managing director at $400-million-asset

TFS Capital

, of West Chester.

"Since the close of trading Thursday, the return on Friday, Monday, Tuesday and part of today, the S&P was down 2.1 percent, while the stocks on the [SEC short-selling ban] list were up 1.8 on average. The median was flat," Chen noted. "That kind of 2 percent spread means very little. If these stocks were being driven to zero by short-selling pressure, when you have a ban imposed, they should shoot up."

To Chen, that's a sign that the

Securities and Exchange Commission

and Britain's

Financial Services Authority

were performing for political audiences when they stomped the shorts. "It's not about the substance of the ban, but the publicity, that 'we are here to support the market,' " Chen said of the regulators.

Hill CEO takes on the tower project despite the economic climate.

PhillyDeals, C3.