RESIDENTIAL
In April, I did a front-page story detailing a series of financial restructuring deals made by Irvine developer SunCal Cos. and one of its largest financiers, New York-based Lehman Brothers Holdings Inc.
Now the dealings between the two are starting to get a lot more attention from Wall Street, following a massive quarterly loss for Lehman.
Two months ago, I reported that SunCal had reworked its financing for close to 30 projects,many of them backed by Lehman,including San Cle-mente’s Marblehead Coastal housing development.
SunCal has told San Clemente city officials that it now is aiming to get early work done at Marblehead by December, about 18 months behind schedule.
Terms of the restructurings with Lehman weren’t disclosed at the time. SunCal officials said the deals allowed them to remain in control of the projects, most of them in Southern California.
There was talk at the time that Lehman might look to bring in another developer. In one case, a default notice was filed for a SunCal property in Bakersfield.
A few more details were disclosed earlier this month, following Lehman’s announcement that it lost $2.8 billion in the second quarter,a disclosure that brought about a huge hit to the stock of the fourth largest U.S. investment bank.
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Marblehead site: project 18 months behind schedule |
Real estate investments,including a big bet on apartment owner Archstone-Smith of Englewood, Colo., as well as a smaller investment in 24 SunCal projects,were a big factor in Lehman’s loss and stock decline.
The amount of write-offs Lehman made for its SunCal properties wasn’t specified.
They were “similar to other large transactions that have occurred in relevant markets,” said Erin Callan, Lehman’s then-chief financial officer, in a conference call earlier this month with analysts.
She was demoted a few days after the call.
Lehman has $1.6 billion of SunCal assets on its books, according to the investment bank. Of those, about $250 million are in the Inland Empire. The company has assigned a reduced value of $29,500 per lot to its SunCal holdings.
Lehman officials said they still are projecting returns of 15% on their SunCal assets. Skeptics doubt the company is likely to see those returns and say more write-downs are due. Land prices in the Inland Empire have been falling nearly 2% per month for much of the past two years.
In all, Lehman took about a 2.5% write-off on about $12 billion of real estate assets in the quarter.
The small size of that write-off “strikes me as a potential problem,” said David Einhorn, the head of hedge fund manager Greenlight Capital Inc. of New York, a big critic of Lehman lately.
Another local development deal backed in part by Lehman is Skyline at MacArthur Place, the two 25-story condo towers going up in Santa Ana. Lehman loaned Santa Ana-based developer Nexus Cos. $32 million for that project.
COMMERCIAL
A real estate investment trust arm of Newport Beach’s KBS Cos. bought a three-building office complex in the northern Virginia suburb of Washington, D.C., for $153 million.
Tysons Dulles Plaza, which totals 487,775 square feet, sold for about $313 per square foot. Vornado Realty Trust was the seller.
The complex, in the Tysons Corner area of McLean, Va., is 90% full with 48 tenants. KBS now owns about 817,500 square feet of office space in the area.
Esnard Joins Grubb
Santa Ana-based Grubb & Ellis Co. hired Glen Esnard as president of its capital markets division, a new position.
Esnard is responsible for directing Grubb & Ellis’ investment brokerage business, which includes its institutional investment group and private capital investment group. He has three decades of commercial real estate experience.
Most recently, Esnard was president of brokerage services at Colliers International Property Consultants Inc.
Colliers Adds Pinsel
Colliers International named David Pinsel director of the Boston-based company’s private capital advisers group, which serves investors in commercial real estate and housing.
Pinsel will head up the greater Los Angeles operations for the group and will be based in Collier’s Irvine office.
Pinsel was previously a senior investment adviser at Sperry Van Ness in Irvine.
