August 09, 2013

Whatever Happened to SunCal?

SunCal suffered three years of tough luck. The Irvine-based developer lost a slew of California development projects after its financial partner Lehman Brothers tumbled into bankruptcy. A planned 55,000- acre development outside Albuquerque slid into foreclosure, while the Alameda City Council voted SunCal off the Island after voters soundly rejected the company’s development and business plans for the Point.

But the same economic crisis that shut the door on dozens of the developer’s planned projects opened a window for an experienced development company. Sun- Cal could access the capital needed to buy stalled projects from bankrupt builders – for a fraction of what had originally been invested in them. With the reported backing of D.E. Shaw and other financiers, Sun- Cal began buying up these projects; properties in Virginia, Las Vegas, Texas and Chicago are among them.

Potomac Shores is a planned resort community to be built on 1,920 acres of hardwood forest that hug a two-mile stretch of the Potomac River, in Virginia’s Prince William County. Once completed, the development is expected to include up to 4,000 homes and 3.7 million square feet of commercial space. This includes a five-star resort, along with a 450-slip marina and an already built Jack Nicklaus-designed golf course.

The project’s town center has been redesigned to cluster major employers around a new, $75 million Virginia Rail Express station that will one day ferry passengers to Washington, D.C. – just 30 miles away. Its developer is promising more than 15 athletic fields, and eight-mile trail network.

McLean-based Kettler, Inc. reportedly worked on the project for a decade, until a $100 million loan from Wachovia Bank went into default. The bank seized the property in 2009. Two years later Potomac Shores was purchased by a new developer, one that suffered similar misfortunes as a result of the economic meltdown but was able to turn them into a promising new business opportunity: Former Alameda Point developer SunCal Companies.

“We recognized that business opportunities presented themselves as a result of the global economic crisis and its impact on the housing market nationwide,” Sun- Cal spokesman Joe Aguirre said.

Aguirre said the developer – which specializes in master-planning large communities – hasn’t abandoned its efforts to acquire and build on raw land. In March, SunCal broke ground on new military facilities at Camp Park in Dublin, and the developer will receive land for a planned mixed-use development in exchange.

It’s also not the first time Sun- Cal has come in to jump-start a stalled project. The planned Marblehead development in San Clemente -which SunCal is no longer spearheading – has a tangled, decades- long history. SunCal was also brought in to plan and develop Alameda Point after the original consortium of developers and financial types backed out of the project.

But the developer has made a much more aggressive push toward jump starting stalled projects since the 2008 crash, purchasing 22 partially developed residential neighborhoods in the Las Vegas area in 2009, Aguirre said, along with seven residential neighborhoods in Chicago and one in Stockton a year later, all from the same bankrupt developer. SunCal made its new national reach official in 2010, planting an office in New York City – a move that gives the company better access to new funding sources and acquisition opportunities in the East, South and Midwest, Aguirre said.

“We are continuing to seek out new business opportunities in key markets around the U.S. that are poised for growth,” Aguirre said.

The company reportedly made $100 million in land purchases in 2012 and at the start of 2013, paying $15 million for 758 acres of the partially finished ShadowGlen development in Austin, Tex. and $19.8 million for the 208-acre Park Highlands development near Las Vegas.

Besides buying up stalled developments, SunCal’s principals own a separate business, Argent Management, which handles some $3 billion in distressed loans and bank-owned properties in 32 states. Assets under management include a portfolio of more than 1,500 assets owned by Santa Monica-based Colony Capital valued at $817 million,
Aguirre said. (Argent is also reportedly managing the Chicago and Stockton lots.) Aguirre wouldn’t say who is financing SunCal’s buying spree, saying only that the developer works “with a variety of leading, well-funded investment firms.”

Whoever is backing SunCal, though, is helping the developer acquire properties at a fraction of what has been invested in them – with communities planned, development rights established and varying degrees of infrastructure already in place.

Read more at http://webh.it/alamedasun.

SunCal’s Acquisitions

Former Alameda Point developer SunCal Companies is bouncing back from a tough few years by embracing the economic downturn that swept up many of the company’s onetime development projects. Here are some of the stalled projects the company has acquired.

2009: SunCal partners with D.E. Shaw to purchase 1,073 Las Vegas home lots from bankrupt developer Kimball Hill for $20 million.

2010: SunCal partners with D.E. Shaw and The Roanoke Group to buy 734 Kimball Hill lots in Chicago and Stockton for $8.3 million.

2011: SunCal and an undisclosed financial partner acquire the Harbor Station development in Prince William County, Va. for $55 million and rename it Potomac Shores. A transit-oriented resort community with as many as 4,000 homes and 3.7 million square feet of commercial space are planned around a finished golf course. SunCal and the company’s financial backers win back three of the developer’s former Southern California development projects in a public auction, for $71 million. SunCal will manage one of the developments, which it sold to one of its backers for $15.5 million.

2012: SunCal buys the partially- developed 208-acre Park Highlands project, in Las Vegas, for $19.8 million.

2013: SunCal buys 758 acres of a half-built 1,400 acre project, ShadowGlen in Austin, Texas, for $15 million. SunCal buys the unfinished Savannah Quarters project in Pooler, Ga. The company hasn’t disclosed the purchase price.