Housing deal by Disney could unravel - OC Register, 10/30/07

[Darkbeer]

http://www.ocregister.com/news/prope...veloper-suncal

Last week in Orange County Superior Court, SunCal sued the property owner, Frank Family Partnership, for backing out of a contract to sell the 26-acre plot, seeking $60 million in damages.

Skip Miller, SunCal’s attorney, said the property owner agreed to work with the developer to obtain government permission to develop the land, where mostly mobile homes sit. He said the purchase contract should stand until the ballot measures are resolved.

SunCal has given $5 million to the owners and spent $5 million on lobbying.

“We’re not walking away from $10 million, and it’s not going to happen,” Miller said.

An attorney for the property owner, however, said SunCal broke its agreement to pay $500,000 by Oct. 1 to extend a deadline to complete the purchase.

Ed Connor, the owner’s attorney, also said that under a purchase contract amendment, SunCal must complete the deal by the end of the year regardless of whether it has permission to build on the land.

“I think he (the owner) would have stuck by these guys longer if there was some light at the end of the tunnel. There didn’t seem to be any light at the end of the tunnel. They couldn’t suggest that there was,” Connor said.

[symbolic]

sometimes the best thing you can do when your mortaly wounded is just find a nice quite place to die. poor SunCal just cant figure it out.

[Darkbeer]

FYI, those folks in the SoCal area, there will be a forum at Cal State Fullerton this Thursday night.

http://www.ocregister.com/news/estate-real-anaheim-1911984-land-resort

The forum begins at 6:45 p.m. in the Portola Pavilion at the Titan Student Union.

http://campusapps.fullerton.edu/news...ealestate.html

[Ride Warrior]

Originally Posted by Darkbeer

http://www.ocregister.com/news/prope...veloper-suncal

Poor dumb bastards.

Originally Posted by symbolic

sometimes the best thing you can do when your mortaly wounded is just find a nice quite place to die. poor SunCal just cant figure it out.

Wonder if SunCal will decide to build a resort hotel or a theme park on their new property.

Originally Posted by Darkbeer

FYI, those folks in the SoCal area, there will be a forum at Cal State Fullerton this Thursday night.

http://www.ocregister.com/news/estate-real-anaheim-1911984-land-resort

The forum begins at 6:45 p.m. in the Portola Pavilion at the Titan Student Union.

http://campusapps.fullerton.edu/news...ealestate.html

That's our Gal...loway! She's grasping at any straw that pokes her in the eye or up the nose. She 'll soon be put out of her pain when voters approve the SOAR/Disney initiative. A debate at this point is a hilarious exercise in futility - where affordable posturing losers are concerned.

[Darkbeer]

Of Course, SunCal can walk away from others, leaving them holding the bag....

http://www.bakersfield.com/hourly_ne...ry/250896.html

Lennar sold the property to SunCal last February, loaning SunCal subsidiary SunCal Mission Lakes LLC $74.3 million at the time.

That loan defaulted last week. SunCal now owes Lennar more than $83 million with interest and fees, the default notice shows.

Emile Haddad, chief investment officer for Miami-headquartered Lennar Corp., said Lennar will take the property back.

"It's unfortunate SunCal chose not to pay the note," said Haddad, speaking from the company's western base in the Orange County city of Aliso Viejo.

[Darkbeer]

http://www.ocblog.net/ocblog/2007/10....html#comments

But what happens to the property rights argument if the property owner and the developer part ways? We will find out soon enough, as a lawsuit filed last week pits SunCal against Franks. A copy of that lawsuit can be viewed here:

http://www.ocblog.net/ocblog/files/s..._complaint.pdf

Reading the lawsuit, we find that SunCal has had an option on the property since April of 2005, and that after five extensions Dudley Franks, the property owner and the person who actually has "property rights," chose not to grant SunCal another extension when the current option expired on October 1, 2007.

Thus, SunCal has no property rights and no longer even has an option to purchase the land in question. If property rights are your cause, they now reside solely with Dudley Franks.

It is rumored that Franks has since started negotiations with another developer whose project would be compatible with the existing Resort Zoning that allows hotels and retail usage.

Clearly, the Franks family is the holder of property rights here, and they have tired of waiting for SunCal in its fight against intense community opposition to its proposed zoning-change scheme. While SunCal argues in its lawsuit that Franks was obligated to extend the option again to December 21, any rational person should understand that an extension to December would be pointless, since the matter would not be resolved until votes on the SOAR initiative and referendum next June. This smacks of a desperation move by SunCal.

[Darkbeer]

http://www.mercurynews.com/news/ci_7...nclick_check=1

Frank Family Partnership attorney Ed Connor says the property owners extended the close of escrow eight times.

SunCal is asking for $60 million in damages.

Voters were going to decide on the fate of the project in a referendum next June, but the lawsuit means that fate could now be decided in the courtroom.

"The Frank Family Partnership is apparently blowing off a $46 million deal," claimed SunCal attorney Skip Miller. "We're a very good buyer. We have zoning approval and we're anticipating project approval. But all of a sudden, they just walk away?" Attorneys for the partnership said it was SunCal that turned its back on the deal, signed in April 2005, by failing to pay $500,000 to extend a deadline to purchase the land.

"We were absolutely stunned," said Ed Connor, attorney for the partnership.

[DisneyMickey]

Sun Cal is making a fool of themselves.

[TP2000]

Originally Posted by Darkbeer

Of Course, SunCal can walk away from others, leaving them holding the bag....

http://www.bakersfield.com/hourly_ne...ry/250896.html

The more and more we learn, the more SunCal looks like a very shady developer with some ethics issues in the corporate office.

Darkbeer, I don't know how you find this stuff, but thank you!

That one is fascinating. I won't pretend to know enough about big developers to get exactly what SunCal's strategy here was. Certainly they can't be that hard up for money that they outright defaulted on the loan with no other choice. There must be some strategic benefit for them to default on such a huge loan to another big player like Lennar.

And yet, I can't think of what that benefit may be, aside from getting out of their bad business decision to take on an 80 million dollar loan just as the housing bubble burst in a very ugly way. This has to hurt SunCal's long term financial standing though, as not even big companies can default on a loan without it impacting their credit rating and financial standing within the banking system.

Maybe the answer really is as simple as it seems; SunCal is running out of money like some other big developers and simply could no longer afford the 80 Million dollar loan?

Also interesting that SunCal has already sunk 10 Million into the Anaheim mess they created. They've got to be feeling pretty stupid about now. The biggest pain for SunCal is still to come though, when the Anaheim voters go to the polls next June.

[Darkbeer]

http://ocresort.freedomblogging.com/

A buyer is in negotiations to purchase the plot where SunCal proposed to build homes in the Anaheim Resort.

Attorney Ed Connor, who represents the property owner, declined to say who the potential buyer is. But he insisted that the buyer is not Disney. And the buyer plans to develop the plot with a tourist use, as it was originally intended.

Just last week, SunCal filed a lawsuit against the property owner, Frank Family Partnership, over a breach of contract. But Connor said SunCal walked out on the purchase when it failed to pay $500,000 to extend the contract.

A default notice was sent Oct. 4, and the partnership began negotiations with a new buyer shortly after. Connor said news of a deal could come within the week.

The 26-acre plot, where mostly mobile homes sit, has been at the heart of a long-standing debate whether housing should be allowed in the resort tourist zone. Disney launched a campaign to fight SunCal’s proposed development, filing a lawsuit and spearheading two ballot measures.

[TP2000]

In a story that will appear in Monday's edition of the Orange County Business Journal, Lennar has just announced that it has halted all sales at it's 1,500 unit Central Park West condo development in Irvine.

This includes the high-rise luxury Astoria towers that are nearing completion. There are also hundreds of additional Lennar condo units nearing construction completion in the CPW development. But none of them are selling, and Lennar will now halt all future construction, bring the current construction to an end, shut down it's Central Park West Living Studio sales center across the street, and now just sit and wait a few years for the market to rebound before it tries to resume selling these already completed condominiums.

The completed buildings will be sealed and put into mothballs for the time being, with a small security detail the only residents at Central Park West for the foreseeable future.

Lennar has also put a halt on further construction of its Platinum Triangle development a few blocks from Disneyland in Anaheim, as well as the massive Lennar housing development once planned near the Irvine Great Park on the old El Toro USMC base.

That should tell you what the market is like now for shoebox condo units in Orange County. The Central Park West site is vastly more attractive than the property SunCal is making a fuss over. The CPW site is located on Jamboree near several other high rise luxury condo towers that are already completed and occupied, as well as being within walking distance of several upscale and trendy shopping centers with high end retail, services, and dining. Plus, Irvine is already a more attractive housing market than central Anaheim thanks to the top-notch schools and first-rate public amenities available to Irvine citizens.

Taking this Lennar news into account, it's obvious that the SunCal site doesn't stand a snowball's chance in heck of being a lucrative housing site at any time in the next 10 to 15 years. It will take years and years for just the Platinum Triangle to recover from this housing depression sweeping OC. And Lennar had already spent millions prepping the Platinum Triangle land with infrastructure, streets, parks, etc. Now Lennar is shutting it down and putting it in mothballs through at least the end of this decade.

SunCal is cooked. Thus far, SunCal's Anaheim Exit Strategy seems to only be alienating their previous allies, and burning bridges with a few of the politicians who once supported them in Anaheim's city hall.

Once the OC Busines Journal story is available on their website tomorrow, I'll link to it. But it can be read today on the front page of this weeks Orange County Business Journal for those that get that business weekly.