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SunCal, DE Shaw, Facing Foreclosure on Albuquerque New Mexico Project

Today, the Albuquerque Journal reported that SunCal and DE Shaw are facing foreclosure proceedings on their 55,000 acre project on Albuquerque’s West Side, meaning they could lose the land to lenders, and proving false claims by Measure B proponents that DE Shaw’s $29 billion in assets under management back up SunCal at Alameda Point.

The Journal report includes the following:

A huge tract of land slated for residential and commercial development on Albuquerque’s West Side could be turned over to creditors because of foreclosure proceedings against California-based SunCal Cos.

Lenders filed a foreclosure lawsuit against SunCal Cos. in state court in New Mexico this week to collect more than $180 million in outstanding loans their developer used to finance the property purchase from Atrisco Land Grant heirs.

Barclays, Five Mile Capital and iStar Financial jointly loaned SunCal about $220 million for the project, which SunCal co-owns with New York firm D.E. Shaw.

The lawsuit asks that SunCal be compelled to pay $182 million, plus accrued interest and late fees, immediately. SunCal put up its project’s assets, including the land, as collateral, according to the lawsuit.

That means the lenders could seize the project from SunCal if it doesn’t come up with the money.

SunCal bought about 55,000 acres on Albuquerque’s West Side for $250 million in 2007. The company’s project was slated to include a master-planned community with acreage reserved for new industrial plants and retail, although the company has yet to lure a company into the project.

The loan recently matured but no deal has been struck to renew, modify or extend the note.

SunCal spokesman David Soyka said Friday that SunCal and D.E. Shaw had made all of its payments on time and have been trying to negotiate an extension.

16 comments to SunCal, DE Shaw, Facing Foreclosure on Albuquerque New Mexico Project

  • barb

    Wait, wait wait! I thought DESHAW was the money behind SUNCAL? If so, why is it borrowing from other entities for development projects? Is that why SUNCAL and DESHAW won’t let the public have access to the financial information of the exact make-up of the pool of developments that will be or are used as collateral for the POINT? There is no money? Only the prospect of obtaining funding based on the credit worthiness of the project whan approved? No way should anyone vote for Measure B until SUNCAL/DESHAW publicly reveals the source(s) of any money that they are going to use for the POINT.

  • Exactly!

    Of the $29 billion in assets under management – DE Shaw is a hedge fund, remember, they manage OTHER people’s money – not all of that is designated to invest in high-risk real estate deals. Not everybody who turns their money over to DE Shaw to manage wants it invested in real estate.

    So DE Shaw and SunCal put a little bit of their own money as equity into the project, and then went to Barclays, FiveMile Capital and iStar Financial to borrow the rest.

    Remember that Barclays bought most of Lehman’s assets out of bankruptcy about a year ago, and the folks managing Lehman through bankruptcy, are suing Barclays over the price.

  • Vania

    Perhaps this shows the “real estate professionals” at D.E. Shaw are even bigger risk takers than the people at Lehman Brothers who decided to invest in SunCal projects. At least Lehman Brothers arranged for its affiliates to make the mortgage loans on the Lehman/SunCal projects like Oak Knoll.

    If you read that Albuquerque Journal article, things seem very straight forward. SunCal borrowed money from Barclays Capital and two of its partners to buy the Albuquerque property. The mortgage had a “balloon payment” due of $182 Million. For whatever reason Barclays and its partners didn’t want to refinance the loan, or D.E. Shaw didn’t like the terms being offered.

    If D.E. Shaw has $29 Billion under management you would think that they could find $182 Million in one of their 500 entities to lend to this DE Shaw/SunCal venture, to avoid the embarrassment of being foreclosed upon.

    Either D.E. Shaw’s real estate employees have absolutely no common sense, or they are backing away from their illusory financial commitments to SunCal across the board.

    I am actually starting to feel sorry for the low level employees of SunCal, and their paid shills re: Alameda Point, because these mouthpieces are clearly clueless about what is going on with SunCal’s ability to attract financing to its projects. How embarassing for them!

  • Here are some details from the New Mexico courts. “Westland Devco” is the SunCal entity for the Albuquerque project.

    BARCLAYS VS WESTLAND DEVCO ET
    Case Detail
    Case Number Current Judge Filing Date Court
    D-202-CV-200914749 CLAY P CAMPBELL 12/15/2009 ALBUQUERQUE DISTRICT

    Parties to this Case
    Party Type Party Description Party # Party Name
    D DEFENDANT 1 WESTLAND DEVCO LP
    D DEFENDANT 2 WESTLAND DEVELOPMENT CO INC
    D DEFENDANT 3 ALBUQUERQUE CITY OF (C)
    D DEFENDANT 4 ROMERO EXCAVATING & TRUCKING INC
    P PLAINTIFF 1 BARCLAYS CAPITAL REAL ESTATE INC

    Civil Complaint Detail
    Complaint Date Complaint Seq # Complaint Description Disposition Disposition Date
    12/15/2009 1 OPN: COMPLAINT Pending
    COA Sequence # COA Description
    1 FORECLOSURE
    2 DEBT AND MONEY DUE
    3 DECLARATORY RELIEF
    4 OTHER DAMAGES
    Party Name Party Type Party #
    WESTLAND DEVCO LP D 1
    WESTLAND DEVELOPMENT CO INC D 2
    ALBUQUERQUE CITY OF (C) D 3
    ROMERO EXCAVATING & TRUCKING INC D 4
    BARCLAYS CAPITAL REAL ESTATE INC P 1

    Register of Actions Activity
    Event Date Event Description Event Result Party Type Party # Amount
    12/15/2009 ARB: CERT NOT SUBJECT
    FILING COURT-ANNEXED ARBITRATION CERTIFICATION (PL)
    12/15/2009 AFFIDAVIT
    FILING VERIFICATION OF COMPLAINT, AND AFFIDAVIT IN SUPPORT
    OF APPLICATION FOR WRIT OF REPLEVIN AND APPOINTMENT OF
    RECEIVER (PL)
    12/15/2009 SUMMONS ISSUED
    12/15/2009 OPN: COMPLAINT
    FILING COMPLAINT FOR FORECLOSURE AND MONEY DUE AND FOR
    DECLARATORY RELIEF, APPLICATION FOR SUPPLEMENTAL RELIEF,
    AND VERIFIED APPLICATION FOR WRIT OF REPLEVIN AND
    APPOINTMENT OF RECEIVER
    12/15/2009 ASM: CIVIL FILING W/ ARBITRAT P 1 $ 132.00

    Judge Assignment History
    Assignment Date Judge Name Sequence # Assignment Event Description
    12/15/2009 CLAY P CAMPBELL 1 INITIAL ASSIGNMENT

  • BusinessWeek story

    http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-200912191727KRTRIB__BUSNEWS_50889-495QTHIFR8DFNE77NHM18KH07A&params=timestamp||12/19/2009%205:27%20PM%20ET||headline||SunCal%20May%20Face%20Foreclosure%3A%20Suit%20Filed%20Against%20West%20Side%20Developer%20[Albuquerque%20Journal%2C%20N.M.]||docSource||Knight%20Ridder/Tribune||provider||ACQUIREMEDIA&symbol=GS:US

  • barb

    So they sued the City of Albuquerque as Defendant No. 3? Does this mean the City of Alameda will probably get sued if Measure B is approved by the voters and SUNCAL/DESHAW doesn’t come up with the goods as promised?

    If this is true, then shouldn’t the voters be told what the financial resources the two partners, SUNCAL/DESHAW are putting behind the ALAMEDA POINT project – before we vote???

    Exactly how much money is SUNCAL/DESHAW putting into this project? Does anyone out there know? Sorry to sound so stupid, but this seems so basic, why would anyone hide this info from the voters?

  • RM

    Thank you, Action Alameda for finding this information and distributing it. We’ve asked for months what the City Council/staff know/knew about DE Shaw and all we got in return were blank looks.
    How, oh, how, could any of them have supported this developer and this hedge fund?

    The citizens on the committee to support this attempt to “Revitalize Alameda Point” should apologize for helping to get us into this mess.

    Any politician who supports Measure B should be voted out of office at the first opportunity.

  • Note Defendant # 4 the trucking company. This suggests that work has been going on for some time, and DE Shaw/SunCal started stiffing the contractors – the trucking company – long ago, just as Lehman/SunCal did at SunCal Oak Knoll, and the other 29 bankrupt Lehman projects.

  • Stan

    I’m surprised you have not discovered Google. Just type in Suncal Bankruptcies. They talk big and if they don’t get their way they sue you! Not the kind of company you would want in Alameda. They tried to bully their way into Anaheim, but the voters got together and put an end to their threats and poor planning.

  • […] This post was mentioned on Twitter by ActionAlameda, John Foreman. John Foreman said: SunCal, DE Shaw, Facing Foreclosure on Albuquerque New Mexico … http://bit.ly/8vWFtE […]

  • Vania

    Stan is right about SunCal’s owners and employees being bullies. I have talked to two ladies who were public water agency directors with jurisdiction over SunCal’s now-bankrupt Northlake project in Castaic, CA.

    The majority of the water agency’s directors, and their engineers, had determined, prior to SunCal’s application for water service, that the water agency didn’t have enough State Water Project water or well water to serve more new housing projects. So the water agency turned down applications for water service from all new home development projects.

    When SunCal applied for water service for its Northlake project (which it had already foolishly bought with Lehman Brothers’ money) SunCal’s application was rejected. SunCal’s response was to sue the public water agency, and surreptitiously spend tens of thousands if not a hundred thousand dollars in unreported campaign contributions for phone banking and hit mailers trying to remove the water agency’s directors who had voted to protect the agency’s existing customers by not allowing new housing developments to connect.

    SunCal succeeded in knocking one of the two ladies off the board, and then a third board member, a scientist started getting mysterious consulting contracts providing a nice cash flow.

    Soon afterwards SunCal then had a 4 person majority on that public water agency’s board, and obtained a water service contract for its Northlake project.

    The fact that the public water agency doesn’t have enough water for its own customers, let alone the unbuilt Northlake project, became simply irrelevant, because SunCal bought enough politicians and public agency employees to get the job done.

    The customers of this public water agency are now living under defacto water rationing, where they have to pay extra for larger quantities of water, with no adjustment for family size. The “tiered pricing structure” is a very upsetting issue in a community with lots of Mormons who have lots of kids.

    And these two ladies tell me now, even worse, other homebuilders competing with SunCal are saying to the public water agency “If you gave water service entitlement to SunCal, you are obligated to give us water service too, under the Equal Protection clause of the California constitution”.

    If you go back into the news reports about SunCal’s campaign to get tax increment financing in New Mexico, you’ll see constant reports about cash being distributed here, there and everywhere by SunCal’s lobbyists.

    Alameda’s city staff members and elected officials should keep their distance from SunCal’s employees, lobbyists and lawyers. Any city staff member or elected official who is supportive of SunCal needs to be watched very closely, including keeping an eye on those officials’ spending habits.

  • barb

    Oh my goodness!! When will this bad news about such a bad character – SUNCAL/DESHAW, ever end?

  • Vania

    I went back to look at that Albuquerque Journal article from yesterday, and stumbled upon an earlier article which shows that SunCal may have had an influence on Albuquerque’s city councilmanic elections, defeating their most fiscally conservative critic, who did not want tax increment financing, aka redevelopment financing like SunCal proposes in Alameda.

    So if the people running D.E. Shaw don’t flake out, I believe SunCal has showed Alameda its “Plan B”. Get rid of elected officials who won’t cooperate. Where have I heard that story before?

    Here are the key excerpts of the post election article:

    “Albuquerque Journal
    Thursday, October 08, 2009

    Republicans in City Hall Nay Favor Development, Budget Cuts

    By Dan McKay
    Journal Staff Writer

    City Hall is about to take a turn for the conservative.

    Albuquerque voters this week elected their first Republican mayor in 28 years, Richard Berry, and gave him a Republican majority on the City Council.

    It could mean a City Hall that’s more receptive to incentives for West Side growth, certain budget cuts and restructuring the system of development impact fees, city officials and observers say. …

    Councilor-elect Dan Lewis, a Republican who defeated incumbent Michael Cadigan, said he hopes to avoid the kind of animosity that council members have had in the past with the Mayor’s Office. …

    Here’s a look at some potential changes: …

    Cadigan, an influential Democrat who lost his seat to Lewis, was a leading critic of approving tax incentives for SunCal’s land on the far West Side. His absence could lead to a council that’s more receptive to tax increment development districts on undeveloped land, several observers and officials said. …

    Harris said there might be modifications to the city’s “planned growth strategy,” which encourages infill development and demands that growth at the fringe pay for itself. He said he expects councilors to still support those concepts, but there “might be some modifications.”

    Berry also said residents may see a change in City Hall’s approach to growth and development. He said he favors creating “smart, sustainable growth. That may be somewhat different from the past.”

  • ‘sfunny…. Doug Linney, of our local water board, was put on SunCal’s payroll too….

    http://action-alameda-news.com/2009/06/03/doug-linney-of-ebmud-confirms-hes-working-for-suncal/

  • The Albuquerque SunCal, DE Shaw partnership has filed for bankruptcy

    http://www.reuters.com/article/idUSN0519094320100405

  • State Water Board Says Alameda Point Water Safe To Drink https://t.co/ertnPiIpCU ,
  • https://t.co/WH1B4ciQrn ,
  • State Water Board Says Alameda Point Water Safe To Drink https://t.co/ertnPiIpCU ,
  • State Water Board Says Alameda Point Water Safe To Drink https://t.co/ertnPiIpCU ,
  • Water at Alameda Point Undrinkable https://t.co/N1GzTeHbbK ,

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