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Saturday, December 19, 2009

Comments

Vania

No it's not about the defeat of the TIDD financing.

It's the simple business principle that when you have a mortgage with a maturity date which occurs, you pay the $182 Million you owe the mortgage lender, or they foreclose on you.

Assuming that there really is a partnership or joint venture or LLC co-owned by D.E. Shaw and SunCal, they simply failed to pay their mortgage when it matured.

I don't think anyone other than one or two Albuquerque title insurance companies had any idea that the Altrisco land was mortgaged to someone other than D.E. Shaw, SunCal's self-proclaimed "financial partner".

This is really a shock. Poor SunCal, first being stiffed by their financial partner Lehman Brothers and then being stiffed by their financial partner the D.E. Shaw group.

Action Alameda

Thanks for covering this. In Alameda, SunCal is running around touting "$29 billion at DE Shaw to back us up!"

Where's that money to pay the bills on West Mesa? Nothing, Nada, Zip.

Same b.s. promises, whether it be Albuquerque or Alameda.

http://actionalameda.org/actionalamedanewsblog/2009/12/19/suncal-de-shaw-facing-foreclosure-on-albuquerque-new-mexico-project/

Ian

Don't feel bad for suncal - what a horrible, sprawltastic development group. I hope that whoever does got a hold of all that westside land does something responsible, either as land preservation or actual smart-growth development. As for the Atrisco heirs, it's difficult to feel sorry for them as well for their shortsighted decision to give the land over to Suncal. However, it's a real shame that all the money that was to be paid for community development/college funding for heirs is likely down the drain.

Vania

Ian said "It's a real shame that all the money that was to be paid for community development/college funding for heirs is likely down the drain."

Yes, that is exactly what will happen if this property is foreclosed, or if the entity which owns it files for Chapter 11 bankruptcy, unless the promises were secured by a first lien mortgage on some real estate.

The same thing happened when Howard Hughes heirs sold his huge property in Summerlin, west of Las Vegas, to the Rouse Company. The promises of future "profit participations" were just a piece of paper. Rouse was acquired by General Growth Properties, which later filed more than 100 separate, simultaneous bankruptcies for its subdivision and shopping mall projects. In the case of the Summerlin entity's bankruptcy the Las Vegas newspapers speculate that the bankruptcy was filed in order to avoid paying Howard Hughes' heirs the first installment of money due them.

D.E. Shaw's management clearly knew that SunCal doesn't have $182 Million to pay the mortgage when it came due, and that it was their job to come up with the money. D.E. Shaw's failure to come up with the money, and force SunCal to be involved in another huge foreclosure certainly seems cruel, to say the least.

The practical question is what of D.E. Shaw's alleged promise to SunCal that D.E. Shaw would be the "stalking horse bidder" to buy all of the Lehman/SunCal properties out of the 26 bankruptcies in California?

Hunter

The down side of all this is that a subsequent player will pick up the land at a substantially reduced basis, thus justifying a new "price point" below what SunCal promised. In other words, instead of crappy development we get really crappy development.

Heir Pierre

Be patient, new ownership will decide, meanwhile the horizon remains somewhat intact for now. Voters would not pay extra for unknown impacts. Good work for them.

vacant land is very expensive to own, and responsible stewardship remains with the voters and neighbors, keeping strong.

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