SAN FRANCISCO | Projects: Under Construction, Approved, and Proposed

[peanut gallery]

It looks kind of like that, but I think it's a preventive measure.

[POLA]

^No, just as a precaution. But they must be doing some work on it too.

edit: you beat me to it.

[BTinSF]

Crunch hits downtown S.F. landowner
Two prime sites for sale
San Francisco Business Times - by J.K. Dineen

California Mortgage and Realty President David Choo is selling off nine properties, including two downtown development sites, in a bid to save his struggling private mortgage company.

In a July 23 Securities Exchange Commission filing, CMR details "cash flow problems" stemming from the fact that 84 percent of the private lender's borrowers in its second fund are delinquent on payments. In the filing, Choo said $5 million of the profits generated from the real estate sales would pay CMR's debts and obligations; another $1.5 million would be set aside for the company's overhead and operating costs.

The properties listed for sale include an office tower development site at 524 Howard St.; a two-family building in Pacific Heights; a condo at the St. Regis; houses in Piedmont and St. Helena; a condo in New York; and the seven-parcel assemblage at First and Mission where Choo and development partner Solit Interests Group had sought approvals to build six razor-thin 1,000-plus-foot towers designed by celebrity architect Renzo Piano. The First and Mission property was recently assessed at $140 million. CMR CEO James Gala said that three properties, one in the South Bay, one in Las Vegas, and one in San Francisco, are in contract to be sold. The loan balance owed on these properties is not known.

"We expect that these sales will provide the balance of the capital needed to meet these obligations," Gala said in a written statement.

Selling real estate he owns by himself or with other investors is just the latest of a series of measures Choo has taken to help CMR weather the financial markets' turmoil. He voluntarily deferred or waived over $3 million in servicing and asset management fees over the past 18 months; he took over $1.5 million of fund obligations onto his own books; he bought approximately $18 million of defaulted loans and foreclosed properties from CMR's funds.

The actions "bolster our cash resources and improve the likelihood of our continuing operations through 2008," according to SEC documents.

A risky industry

Private mortgage lending, or hard money lending, is a business that provides high-interest, short-term capital for borrowers in challenging situations. Some borrowers, mostly developers and investors, are unable to qualify for traditional financing; others need cash quickly without the red tape than large institutions typically require. The business can be lucrative for lenders: in the case of CMR, annual interest rates have averaged between 12 percent and 13.9 percent, bringing handsome returns to investors, according to filings.

But starting in late 2007, CMR borrowers started running into problems. Delinquencies in CMR's fund II portfolio increased $52.9 million from December 31, 2007 to May 31. As of May 31, 21 CMR loans worth $84.9 million were delinquent, of which $81.9 million was delinquent more than 90 days, according to the SEC filing. CMR says its borrowers have been "increasingly unable to make their loan payments, find equity partners, sell or refinance their properties in order to meet their obligations to our investors."

"Their problems have increasingly become our problems and our investors' problems," said Gala. "We continue to work to collect on our loans to our borrowers, to foreclose when necessary and manage the assets of the fund."

Not surprisingly, other companies in the private mortgage sector have also been hammered by the credit crunch and prolonged housing slump. On June 2, 48-year-old Scott Coles committed suicide with a combination of alcohol, oxycodone and zolpidem as his company Mortgage Inc., a $727 million fund and the largest in Arizona, unraveled. The company filed for bankruptcy after his death.

Suspended cash distributions

For now, CMR investors have no choice but to be patient. The company suspended redemptions and cash distributions to investors on March 31. As of May 31, $29.9 million of redemption requests are currently outstanding. Gala said that while "many investors in CMR funds have expressed their support and confidence" the firm has also seen "our share of investors requesting redemptions."

Bill Wessels, who has $1.4 million invested in CMR funds and has been an investor with Choo for a decade, said he is willing to give the company time to work through the foreclosures and bankruptcies. He said he has never had a loss in nine years of investing with Choo and that CMR deserves time to work through the current credit mess.

"You're either a doubting Thomas or you keep the faith," said Wessels. "The ones who get shaken out of the bowl are going to be the losers."

He added: "What would one of the Wall Street guys do here? Take his stock, take his money and say 'bye-bye, see you later.' David is hanging in there."

John and Noreen Harrington, who are investors in CMR along with their eight children and other relatives, echoed Wassels support in the fund. The couple says they have "great faith in David's personal integrity and leadership of this firm."

"We believe that investors have to be patient and wait for the market to rebound," said the Harringtons in a statement.

Credit crunch hits the Big Island

More than half of the delinquent loans CMR is working out come from one development: a $98 million bridge loan funded by CMR and Canyon Capital Realty Advisors for the 2,000-unit Royal Kunia housing development in Hawaii that was current at the end of last year, but has now moved into the delinquent category. Attorney Jonathan Durrett, who represents Royal Kunia developer Halekua Development Corp., said his client is negotiating forbearance plans with the lenders to prevent foreclosure. He said Halekua has been scrambling to replace the bridge loan, but has been unable to attract more equity to the project because of the credit crunch.

"It's been difficult -- I'm sure California Mortgage and Realty didn't need another headache in Hawaii, but they have been mature and professional and seem to be sympathetic to the extent they feel is commercially reasonable," said Durrett. "We have appreciated that attitude because they could have jumped the gun and proceeded to foreclose."

He said that the Royal Kunia project, which is still in the entitlement phase and will target middle- and working-class families on an island known for its tough development politics and lack of housing, would eventually be a success.

"The project is intrinsically good, and this is a traditionally strong market for this kind (of housing)," he said. "Unfortunately, the timing is lousy."

jkdineen@bizjournals.com / (415) 288-4971

Source: http://www.bizjournals.com/sanfranci...ml?t=printable

[peanut gallery]

524 Howard is the Heller-manus tower that's supposed to go right next to Foundry Square IV, right? I didn't hate the design for that, but it wasn't inspiring in any way. Maybe a new owner will come up with a better design.

BT, you usually have a sense for these things: any indication that the Mission/First assemblage will be sold whole or in pieces? I'm thinking the space has more value whole and with a starchitect design in place. But what do I know? Not much, that's what!

[BTinSF]

Originally Posted by peanut gallery

BT, you usually have a sense for these things: any indication that the Mission/First assemblage will be sold whole or in pieces? I'm thinking the space has more value whole and with a starchitect design in place. But what do I know? Not much, that's what!

I certainly think you are right. Aside from the Transbay tower itself, at 800 ft this is the tallest building opportunity in San Francisco and really only works with the entire assemblage of properties.

[BTinSF]

Mexican Museum Inspires Nascent NIMBYism

Allow us (and the Chron) to reiterate: The Mexican Museum has found a new home at 706 Mission Street after thirteen years' worth of drama culminating in a shuttering that, at this point, has lasted for two years. The 35,000 to 40,000 square-foot space shall reside at the bottom of a 220-unit condominium project which, in turn, will stand atop the Mercantile Building; Enrique Norton and Glenn Rescalvo of Handel Architects are on board for the museum re-design (famed Mexican architect Ricardo Legorreta drafted the initial design). Now, as we all know too well, a development proposal isn't legit here in San Francisco until somebody expresses "concern" about [insert issue here]. Aaaaand here we have it. Says a condo owner (and real estate lawyer) at none other than the St. Regis, as quoted in today's Chron article:

"I'm concerned about the scale of the building, incredible amount of traffic on Third Street and shadows, just to name a few" ... Any time you have a public-private partnership and cultural and historical issues, that's a complicated real estate transaction."

And so it begins...

Source: http://sf.curbed.com/

The guy lives in a building virtually identical is size, scale and architectural context to the one under discussion but he's CONCERNED about scale blah, blah. What he's really concerned about is his view. Let's be honest.

[peanut gallery]

Unreal. Hypocrisy can be such a blind spot for people.

[Reminiscence]

This is the same old story all over again. People just watching out for their own best interests and using false aspects as reasons for stalling development. I really do hope people begin to ignore comments like this.

[WonderlandPark]

That corner has that great historic tower, I hope that is being saved.

[BTinSF]

Read back a couple of pages. The new project will preserve and restore the existing midrise very much like the St. Regis.

[WonderlandPark]

I was travelling a bunch when that got posted, now I see. The way the box was drawn on that map made it look like the condo tower would eat the whole corner at 3rd.

[Jerry of San Fran]

A view of Trinity Plaza (1st tower) taken 07-31-08 from my balcony on the 27th Floor of the Fox Plaza.

[peanut gallery]

Excellent shot, Jerry. If you ever want to post other photos of the city from your balcony (not necessarily construction shots), please feel free! Your view must be fantastic from up there.

[BTinSF]

Watcha all think of this:


Source: www.socketsite.com

Numerous other views at http://www.saitowitz.com/portfolio.html

It's called "Pine St."

Also interesting: "1600 Market St.", "1022/1028/1029 Natoma" and others.

[Reminiscence]

Strange, I found the link on their page, but it does not seem to want to work. Judging by what I was able to see, they seem to like using the vertical and horizontal fins or lines on their façades. I like the building posted above, but I can only imagine it'll get some fire for not fitting in with the rest of the block.

[peanut gallery]

I like a lot of those, mostly the Octavia project we've seen before. Stanley has a definite look. It's a strategy that has worked for the likes of Pelli. You certainly have an idea of what you'll get if you hire them.

[Jerry of San Fran]

Peanut Gallery - Thanks. My view is about 50 square miles, all the way down to San Jose. I used to see the North Bay area but downtown highrises as obscured it.

BTinSF - I like the Polk/Pine Street building proposal. The Polk Street corridor has become quite bulky. When I came to San Franicsco I never thought that I would see a church building on Polk Street, but there it is!

[Jerry of San Fran]

Mercy Family Housing - and then there were two construction cranes. Picture from my balcony on Sunday, Aug. 3rd. of the second phase of construction. The second crane placement stared about 3 days ago.

[BTinSF]

Originally Posted by Jerry of San Fran

BTinSF - I like the Polk/Pine Street building proposal. The Polk Street corridor has become quite bulky. When I came to San Franicsco I never thought that I would see a church building on Polk Street, but there it is!

I was going to post something about the very same thing. As many of you know, I only spend half the year in SF these days and when I'm here I don't get everywhere, but I took a walk down Polk St. last evening from CA St. to Eddy. I was astounded at both some of the new construction (mostly on the east side of the street including the Church of Christ building you are referring to) but also at the apparently lively straight nightlife and new eateries springing up. The last time I remember walking that part of Polk it was pretty depressing with marginal businesses and street kids selling drugs and themselves. But things looked very different last evening.

One facadist reuse on the other end of the same block with the church particularly caught my eye but the church too is a stunner.

Anyway, I see in your photo that the second phase of the Mercy Housing project now has its own crane. It seems like only a couple of weeks ago when I went by there they were driving piles.

I also noted on Pine St. that the apparent location of the Saitowitz building is all boarded up and derelict looking so I would hope they actually proceed soon, though as dramatic as that rendering looks I can't believe they could put it next to a Victorian in SF without all kinds of neighborhood screeching.

[Gordo]

For what it's worth, that building has been boarded up for at least three years, but the other businesses that would likely bite the dust are still operating.