I heard this was coming anytime now, but with so many rumors about the project it's hard to know what is true or not. I even heard that CalPERS only got the 25M back with no return, I have no way to verify if it is true or not though.
From the tone of the article is sounds like the new partner(s) are just around the corner. Saca seems to keep pushing back the obstacles on this project, even if it is taking longer that he hoped. The current obstacle would have to be getting those new contracts signed, 250 seems like a nice start, and getting the new equity partners signed.
From what I understand Joe Mohamed and Saca have known each other for years and land under default is not an issue. Given the timing of when Mohamed bought the note on the land right before it went into default, that sounds like a believable rumor..maybe we see him jump in as part of the new team of investors.
I am still concerned about more cost increases though. If it was 70M over budget a few months ago, it could be more by now. There was an article a little while ago about him locking in some prices, but I'm not sure if that is still the case.
EDIT: MORE INFO -
This latest Bee article sounds like CalPERS will only get the 25M back I mentioned above. Not a done deal yet though.
http://www.sacbee.com/103/story/155909.html
"Saca has until May 25 to come up with about $25 million needed to reimburse CalPERS for the money it had spent on the project before construction stalled earlier this year."
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Saca buys out CalPERS stake in Towers project
Sacramento Business Journal - 2:59 PM PDT Monday, April 16, 2007
by Michael Shaw
Developer John Saca has bought out California Public Employees' Retirement System's interest in the Towers on Capitol Mall skyscraper project, allowing him to retain ownership and search for other partners, Saca said Monday.
Terms were not disclosed.
The move may allow the project to move forward if additional financing can be found to cover increased construction costs and to replace CalPERS' $100 million contribution. Although CalPERS did not disclose its financial involvement to date, sources familiar with the project had previously said it had contributed $25 million before work stopped in January.
The two sides butted heads on how to proceed under overruns estimated at least $70 million. Saca said they had reached an "amicable settlement."
The split comes a year after the pension giant announced its intention to invest in the condo towers, with officials calling it "a good investment." Saca called the partnership "a perfect match" at the time.
The relationship soured, though, after it became apparent that the original budget of $500 million wouldn't be enough to build The Towers. Personnel changes at CalPERS may also have played a role -- a strong backer of the project, Mike McCook, left the role of senior real estate investment adviser.
The foundation has yet to be poured and The Towers already owes about $35 million in loans to contractors for work already done. Unpaid contractors have filed liens and lawsuits against the project.
Real estate investor Joe Mohamed purchased the $22 million loan from First Bank that the Towers partnership used to purchase the land on Capitol Mall.
Saca said Monday he is working with Mohamed to pay off the loan or extend it.
Saca said he hoped to be able to pay remaining debts within a few weeks.
"We are working hard to bring in another partner and hope to have a new deal announced within a week or so," Saca said in a news release.
Saca said more than 250 condo buyers have signed agreements that extend deadlines for completion of the project.
"CalPERS has been fair and reasonable coming to this settlement," Saca said. "Neither party foresaw the significant changes in circumstances that have affected this project."
"Over the last several months, I have been inspired and humbled by the hundreds of supportive phone calls and e-mails from citizens all over the Sacramento area," Saca wrote. "They believe in this project; our buyers believe in this project."
The Towers consists of two 53-story towers with 800 condo units and a 230-room InterContinental Hotel.
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My gut feeling is that Saca is crossing the 'T' and dotting the 'i' on who the new money lenders are going to be. I can't see him making a big statement like this unless he had more good news coming down the pike. I think four weeks from now activity will start to happen at the site... maybe six?
I bet at this point everything is pretty well ironed out ...especially with the good number of contract signers stepping up to extend the contract. Saca's been really good about not feeding the media or the buyers bad info.
Good times ahead
Below is a letter that went out to the Towers condo buyers today...
Dear Future Homeowners,
As we have previously informed you, exciting things are happening at The Towers and here are a few announcements that will be released to the media shortly. We wanted you to be the first to hear the news. The response to our addendum request has been very strong and we look forward to hearing from the rest of you in the very near future.
Towers on Capitol Mall Agreement Reached
April 16, 2007
Sacramento Developer John Saca and CalPERS have reached an amicable settlement regarding their ownership interests in the 2.1 Million Square Foot Towers on Capitol Mall Project. The parties have executed an agreement whereby Saca will be purchasing the interest of CalPERS, Saca has made a sizable deposit toward the purchase, the deal will close on or before May 25th. The parties will not disclose the details of the settlement.
Statement by John Saca:
“I am very excited about this agreement, CalPERS has been fair and reasonable coming to this settlement. Neither party foresaw the significant changes in circumstances that have affected this project. This agreement makes it possible for the project to move forward and we hope to make an announcement in the near future regarding our acquisition of a new development team. I would like to personally thank all those at CalPERS who have made this agreement possible.”
Says Saca, “I want to fulfill the commitments I made to the buyers, contractors and the entire Sacramento community. The Towers is the most significant private project in the region.”
Saca is very confident that he has the support necessary to proceed.
“Over the last several months, I have been inspired and humbled by the hundreds of supportive phone calls and emails from citizens all over the Sacramento area. They believe in this project; our buyers believe in this project. The Towers is critical to the future of the city of Sacramento . It’s a world class project for a world class city.”
Saca’s project consists of two 54 floor, 615 foot tall towers anchoring Capitol Mall, just east of the Tower Bridge. There are approximately 800 condominium units divided between the two towers, which will also be home to the Intercontinental Hotel.
As of this writing, approximately half of the condominium units have been pre-sold. “I’m pleased that so many buyers have continued to put their faith in this project. They’re not going to regret it”, says Saca.
In addition to becoming the tallest residential buildings on the West Coast, Saca envisions the Towers as a retail dynamo with the one-two punch of the five star hotel and premier shopping.
“The Towers will be the place to live in Downtown Sacramento. Moreover, completion of this project will open the doors to future Downtown high-rise developments. The Towers is the tip of the iceberg”, says Saca.
A point to clarify:
Calpers committed $100M, but it had only invested $25M of that amount. That is normal among pension systems investing in real estate funds and ventures. The $100M would have been fully invested by the time the project was completed.
I always thought that the equty needed to go in before the loans, not the case?
also - expect intersting news about this project next week
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