Sacramento: 301 Capitol Mall: A New Plan for The Towers Site

[TowerDistrict]

Saca still owns all he needs to put up the Metropolitan. Which has already underwent a traffic study and an EIR. I'm not sure where it lies in the process at this moment, but if Saca wants to rebound quickly, then my money would be on that project. It would also be Sacramento's tallest, btw.

Also, Cathedral Square is jumping through preservation hoops at this moment. So maybe they will resolved their issues shortly.

[sugit]

Aura could still be a new tallest as well. I would think they may see a few buyers come their way from The Towers now that the project as proposed is dead.

[arod74]

Originally Posted by TowerDistrict

Saca still owns all he needs to put up the Metropolitan. Which has already underwent a traffic study and an EIR. I'm not sure where it lies in the process at this moment, but if Saca wants to rebound quickly, then my money would be on that project. It would also be Sacramento's tallest, btw.

I don't see how Saca could rebound so quickly. Unless he is some financial genius, you would imagine he just about lost his shirt with all the money he put in to make the Towers work. Plus, I wouldn't imagine that equity partners are going to be lining up around the building considering his short track record and the problems he had with his equity partner for this failed project.

[mechanico]

Originally Posted by TowerDistrict

Saca still owns all he needs to put up the Metropolitan. Which has already underwent a traffic study and an EIR. I'm not sure where it lies in the process at this moment, but if Saca wants to rebound quickly, then my money would be on that project. It would also be Sacramento's tallest, btw.

Also, Cathedral Square is jumping through preservation hoops at this moment. So maybe they will resolved their issues shortly.

Saca could never get a contractor at this point and financing, with his record, would be next to impossible.

[sugit]

CalPERS buys Saca out of Towers
Sacramento Business Journal - 10:45 AM PDT Tuesday, June 12, 2007
by Michael Shaw
Staff writer

The California Public Employees' Retirement System has acquired the Towers on Capitol Mall project, the pension fund announced Tuesday. It has reached an agreement with its former partner, developer John Saca, to buy his interest in the project.

Saca notified the pension fund that he did not intend to exercise an option to purchase CalPERS interest in the stalled Towers project.

Just what will be built at the site isn't clear.

CalPERS is partnering with its national development partner, CIM Group of Los Angeles, to develop the site and a plan will be developed over the next 18 months.

CIM will first work to resolve outstanding debt, CalPERS spokesman Brad Pacheco said.

[Ryan@CU]

Originally Posted by snfenoc

Nothing new, but there is a nice little report (with video) from Channel 3:

http://www.kcra.com/news/13484545/detail.html

My heart sunk watching that. I forgot that they were the largest residential towers on the west coast

[reggiesquared]

Originally Posted by sugit

At least it sounds like we will know this week what CalPERS is planning.

(shameless plug: i developed the RSS feed system at CalPERS. You should sign up for at least their press release RSS feed to keep up! -reggiesquared

https://www.calpers.ca.gov/index.jsp?bc=/utilities/esubscriptions/rss.xml

)

Soon to be public:

CalPERS has added a press release to CalPERS On-Line on Investment & Corporate Governance.

Title: CalPERS TO ACQUIRE TOWERS PROJECT
Date: 6/12/2007 10:16:51 AM

Contact: Pat Macht/Brad Pacheco June 12, 2007
Office of Public Affairs
(916) 795-3991

CalPERS TO ACQUIRE TOWERS PROJECT

SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) today announced it has reached agreement with local developer John Saca to acquire his interest in the Towers on Capitol Mall, LLC (Towers LLC). This action follows Saca’s notification that he will not exercise his option to acquire CalPERS interest in Towers LLC. “After careful analysis, we decided that our beneficiaries’ best interest is served by acquiring the site and designating our national development partner CIM Group of Los Angeles to serve as lead developer,” said Ted Eliopoulos, CalPERS Senior Investment Officer for Real Estate. “This is a particularly well-located site that can be transformed into a successful development. We are pleased that our long standing partner, CIM Group has agreed to lead our future effort.”
“As the first order of business, CIM will resolve issues with outstanding creditors and complete the first phase of site preparation and then, over the next 18 months, focus on creating a viable development program for this important site.”
“I want to take this opportunity to recognize John Saca’s great entrepreneurial spirit and complete dedication to this project on behalf of CalPERS. While the project experienced unfavorable economic and market conditions, John was a committed partner who explored every avenue to get this project built,” Eliopoulos added.
CIM is one of CalPERS largest urban investment partners, with a long and successful track record nationally in delivering quality real estate projects. Under the new arrangement, CalPERS will continue to be a passive investor in the project. CIM will serve as lead developer and managing member. “Through his vision, Mr. Saca brought focus to the terrific potential of this important site,” said John Given, a Principal at CIM. “We believe that, by taking a step back and working closely with the City and all stakeholders involved, we can develop a program that will serve all of those in the community who want to see this site achieve its potential.” CalPERS has notified the city of Sacramento of its plans and received a favorable response. “ We are grateful to John Saca for his wonderful vision for this site, for his tenacity to try to make this project a reality against a changing economic climate. At all times, he had the interests of the city and its citizens at heart,” said Ray Kerridge City Manager.
“We are also lucky to have an institution such as CalPERS in our community,” Kerridge added. “We appreciate the leadership that CalPERS has demonstrated. Given its strategic location, this site can become another crown jewel for the development of downtown Sacramento. Rather than walking away from the project and the commitments made by Towers on Capitol Mall, LLC, CalPERS took decisive action in taking control of the site and involving CIM, a development group that we at the City have worked with successfully in the past.”
CalPERS is the nation’s largest public pension fund, with assets of $245 billion. The System provides retirement and health benefits to nearly 1.5 million state and local public employees and their families. For more information on CalPERS visit www.calpers.ca.gov. CIM Group is a full-service private equity real estate investor. With an integrated and full-service approach, broad based in-house capabilities, and deep market knowledge, CIM has successfully identified and invested in some of the most vibrant transitional urban districts in North America. CIM specializes in high-density urban communities and a diverse array of asset categories: from mixed-use, office, retail and multi-family residential to hotel, entertainment, parking, media, and signage. Headquartered in Los Angeles, CIM maintains regional offices in San Francisco and Bethesda, Maryland. More information on CIM can be found at www.CIMGroup.com. # # # ]

For additional CalPERS news and information, visit our Press Room at:

http://www.calpers.ca.gov/index.jsp?bc=/about/press/home.xml

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[mechanico]

Originally Posted by sugit

CalPERS buys Saca out of Towers
Sacramento Business Journal - 10:45 AM PDT Tuesday, June 12, 2007
by Michael Shaw
Staff writer

The California Public Employees' Retirement System has acquired the Towers on Capitol Mall project, the pension fund announced Tuesday.

CIM will first work to resolve outstanding debt, CalPERS spokesman Brad Pacheco said.

Thats great for Saca. Free and clear he can go back to building mini malls.

[What is a Rivercat?]

[travis bickle]

Well, I realize that's a press release and that it's going to put everything in the best possible light, but there are quite a few nuggets in there from which we can glean reason for hope.

It seems they recognize the importance of the site.

They are going to finish site work - meaning they want to be ready to move.

18 month time frame about as good as we could hope for and market may be able to more easily sustain (and demonstrate that it can) a high residential number.

City seems to be onboard.

Hey - let's hope for the best. Wait - do more. Demand the best.

[Schmoe]

The Bee's preliminary report says that CIM and CalPERS are exploring another highrise project for the site, so at least that is positive.

[goldcntry]

Okay, so this made me go out to CIM's web site... I know there was a lot of talk about them building a lot of mid-rises, but I did find their 9th and Hope project in Downtown LA: a 34-storey mixed residential...


One project did strike a chord of fear though... they have a project in San Diego called Central Place that calls for twin 20-storey towers...


So there may be some room for hope. I also took solace in the fact that CIM would finish the site prep/foundation work. That leads me to belive that they'll use the same or similar footprint of the Towers (God rest their souls).

:Sad Tomato Doesn't Want to Dance:

[innov8]

CalPERS takes over Towers high-rise project
By Jon Ortiz of The Sacramento Bee

Tuesday, June 12, 2007

The California Public Employees' Retirement System has announced it is taking over the debt-ridden Towers high rise project on Capitol Mall. That means the 53-story luxury condo and hotel that local developer John Saca envisioned for the site near the Tower Bridge is dead.

CalPERS is tapping Los Angles-based developer CIM Group to evaluate and develop another high-rise project at the location that is likely to include a hotel and some condominiums, though not the 400 units Saca had planned for his project (800 right?). The evaluation process is expected to take at least 18 months.

The Towers was the first of a rash of high-rise condo plans put forward for Sacramento's downtown when Saca proposed it nearly three years ago. Many in the local commercial real estate community publicly lauded his vision and guts, but wondered whether the city was ready for a twin tower residential project in its business core. Still, the idea caught on with other developers, including Craig Nassi, a Denver-based developer the Aura high-rise condo tower proposed at 601 Capitol Mall, just a few blocks from the Towers site.
As the nation's largest public pension fund with assets of $245 billion, CalPERS added another layer of legitimacy to Saca's vision when it agreed to invest $100 million in the project. Deutsche Bank, the Germany-based multinational, also agreed to loan Saca another $350 million if he hit certain condo sales targets. The city kicked in another $11 million subsidy for hotel furnishings and fixtures that Saca would get once the project was built.

Saca broke ground last summer, but the project was $70 million to $80 million over budget by the fall and condo sales slowed to a trickle as the region's housing market went soft. The site now is little more than a hole in the ground the size of a city block.

CalPERS declined to disclose what it is paying to take over the project. Ted Eliopoulos, the fund's senior investment officer, said that CIM will "resolve issues" with Saca's outstanding creditors, finish the first phase of site preparation and come up with an alternate project.

[reggiesquared]

Originally Posted by goldcntry

Okay, so this made me go out to CIM's web site... I know there was a lot of talk about them building a lot of mid-rises, but I did find their 9th and Hope project in Downtown LA: a 34-storey mixed residential...


One project did strike a chord of fear though... they have a project in San Diego called Central Place that calls for twin 20-storey towers...


So there may be some room for hope. I also took solace in the fact that CIM would finish the site prep/foundation work. That leads me to belive that they'll use the same or similar footprint of the Towers (God rest their souls).

:Sad Tomato Doesn't Want to Dance:

Well at least we know calpers doesn't really need to searc for equity partners which means waiting around etc to see progress wont be an issue.

[sugit]

I'm glad to hear they are keeping the hotel (hopefully the IC) and housing.

I really wonder how many housing untis they will include. I hope it's at least in the 200-300 range. Some quailty retail space like what was planned for (RIP) The Towers would be nice as well.

[foxmtbr]

Originally Posted by innov8

The evaluation process is expected to take at least 18 months.

Who knows what could happen to the market in that amount of time? Perhaps 800 units would seem feasible by then.

[joninsac]

Originally Posted by innov8

though not the 400 units Saca had planned for his project (800 right?).

Good ol' Bee. Right on the money again.

[urban_encounter]

Originally Posted by reggiesquared

Well at least we know calpers doesn't really need to searc for equity partners which means waiting around etc to see progress wont be an issue.

Good point reggie.

Also Cal Pers comment that they wanted to 'finish the first phase' of site prep work' is interesting.

By "site prep: do they mean finishing driving piles for Tower II?

(I think pile driving for Tower I was finished).

Considering that they are still considering a mixed use hotel condo project, their proposal might still be a considerable tower, (or two).


While it's unfortunate that Saca wasn't able to complete the Tower's as proposed, I'm still hopeful that Cal Pers will come forward with a quality proposal that will make Sacramento proud. I think they (Cal Pers) know that the pressure is on them to deliver such a project, especially given that 301 CM is at the foot of Capitol Mall.


I'm also hopeful that John Saca doesn't give up with his dream of being a residential highrise developer... Hopefully with his bills paid and a clean slate, we will now see him move forward with the Metropolitan.

As far as the city's loan, I wouldn't mind seeing the city up their commitment to Aura. Perhaps redirecting the $11 million from 301 CM to Aura will answer Nassi's Mezzanine loan problem. Although I fully expect CIM and Cal Pers to ask for that $11 million.

[mechanico]

Originally Posted by foxmtbr

Who knows what could happen to the market in that amount of time? Perhaps 800 units would seem feasible by then.

I believe in the 15 year (Peak to Peak) Sacramento Real Estate Cycle.
The Foreclosure nightmare is just starting to unfold and we are knowhere near the bottom. The market peaked in 2005.

[urban_encounter]

Originally Posted by mechanico

I believe in the 15 year (Peak to Peak) Sacramento Real Estate Cycle.
The Foreclosure nightmare is just starting to unfold and we are knowhere near the bottom. The market peaked in 2005.

The market wont need to be as red hot as it was a couple of years ago and if anything what your seeing right now has more to do with the market correcting itself. The forclosures are a result of people buying in a hot market and signing bad deals. Granted it will increase the stock of exisitng family housing.

But few people expect Sacramento's housing market to return to earleir levels.

The four county region is still expecting between 10,000 and 11,000 new housing permits to be issued this year. Not too shabby.