A local housing activist, David Levy, has uncovered a stunning series of real estate transactions that seem to indicate that SunCal, the developer involved in the controversial Village Green project, might be in real financial trouble.
SunCal has defaulted on their financing that involves the Village Green properties as well as two properties in Tustin, where they are proposing the same kind of “displace the poor and working folks” type of projects. The Tustin projects already have all the entitlements in place, although no construction activity has begun.
SunCal recieved a $75,000,000 revolving credit facility from D.B. Zwirn Special Opportunities Fund, LP, a Delaware limited partnership. They used this financing for the acquisition of the 4 complexes in the names of 3 LLC’s. The Village Green entity is SunCal – Heritage Village, LLC. The Tustin entities are SunCal – Red Hill, LLC and SunCal – Browning, LLC.
Zwirn is a huge hedge fund that recently suffered a bookkeeping scandal that led to the departure of two top executives, according to the New York Post.
Notices of Default were recorded against all 3 of the Tustin SunCal entities on 10/19/2007. What is interesting about that date is that they were still appealing the Tustin Planning Commission’s project denial for SunCal – Browning to the Tustin City Council. The appeal was heard 11/20/2007 and the Council (possibly bought and paid for) reversed the Planning Commission. The developers stood before the Council and promised great things a full month after they stopped paying on their loan, with a delinquency of $1,201,953 at the time of NOD.
On Friday a Notice of Trustee’s Sale on 3/6/2008 was posted at the SunCal – Browning complex. It indicates that Notices of Trustee’s Sale were also prepared for the other two entities. As of yesterday the recording of these notices did not show in the Clerk/Recorder’s system, but there is usually a lag time. A representative of the trustee, Chicago Title, confirmed today that the sale is still moving forward.
Further investigation revealed that SunCal is also in foreclosure with the same financial backer on a project in Sparks, Nevada, involving 9 parcels. It is set for sale on 2/27/2008. The defaulted financing there is in excess of $40,000,000.
SunCal is also walking away from a project in Shafter, near Bakersfield, where they acquired land from Lennar for $74,000,000 in debt. They have publicly said that they are going to allow the property to go to foreclosure and Lennar can have the ground back. They used the excuse that the development proposal was complicated by a dispute over water rights, but that sounds like a convenient excuse for a project that no longer will make them the ton of cash they had planned on. You can read more about that project at this link.
SunCal also blew its attempt to build a controversial project in Anaheim. Red County/OC Blog editor Matt “Jubal” Cunningham was involved in that project as a consultant.
Poor people are paying the price as SunCal’s projects grind to a halt. Hopefully local City Councils will wise up and take all this into account when SunCal comes calling again…
You claim that Suncal is doing “displace the poor and working folks” type of projects,
but then go on to state “Poor people are paying the price as SunCal’s projects grind to a halt”
Can you make up your mind?
If Suncal projects displace the poor and now these projects have ground to a halt, how can the poor be paying the price? Just more spin from Art.
Hope Matt/Jubal has cashed his check from SunCal already! Would hate to see all his hard work on the failed Anaheim Resort housing project go unrewarded.
It has not gone unnoticed.
SunCal also blew its attempt to build a controversial project in Anaheim. Red County/OC Blog editor Matt “Jubal” Cunningham was involved in that project as a consultant.
Art, I don’t work on the projects you mentioned, and can’t make an informed comment on them.
But you’re characterization of the Anaheim project is twisted. You’re omitting the tiny detail that a giant corporation — Disney — pumped an enormous sum of money into hiring a national PR firm and a leading political direct mail firm to qualify an ballot-box zoning initiative to prevent anyone from building any residential in the Resort District.
More generally, the down-turn in the residential market is hitting all companies in the residential development industry hard, not just SunCal.
I remember Councilman Bustamonte telling our neighborhood that this would be a wonderful project. Did they give money to Carlos’s campaign?
Follow the money$
Virtually all major residential real estate developments are in trouble. Today’s Register has a full page ad by one announcing auctions in multiple developments – mostly in the inland empire – and also a story on the Irvine twin tower condo. project beginning to see foreclosures, and even a housing development on the Irvine company lands coming to a halt. Stay tuned.
Santa Ana’s twin towers on MacArthur & Main will also fail. Maybe the developer will turn them into rental units.