Tustin: Foreclosures Go Large Scale (Part Deux)
There’s no sunshine ahead forecasted for SunCal. SunCal’s quickly dancing around lawsuits and picking up a shovel to dig themselves out of the latest disaster in Tustin (already lost two properties to foreclosure, one in Nevada and one in Santa Ana).
Back on February 21st, I posted about the potential foreclosure on a Tustin property SunCal was facing (“Tustin: Foreclosures Go Large Scale“). At that time, SunCal stood firm by its plan for the development of a Tustin site (corner of Browning and Mitchell), stating “We remain committed to the planned Hampton Village condominiums and to seeing that the project progresses and is completed as approved by the city of Tustin.” Now that reality is setting in, however, SunCal is changing its tune with David Soyka, SunCal senior vice president of public affairs, reporting to the OC Register “Because of the market conditions, we decided not to pursue the property” (“SunCal responds to questions about unpaid debts” by Jeff Collins). Here’s another interesting excerpt from Collins’ article:
“Q: The lender, D.B. Zwirn Special Opportunity Fund, claims SunCal defaulted on a $75 million loan on August 10 when it missed a $446,000 loan payment. If SunCal was notified of default in August, why did the company go before the Tustin City Council in November to seek approval to build a 77-unit, three-story condo complex at the intersection of Browning and Mitchell Avenues? Did anyone at SunCal tell the city about the default status on that property?
A. Due to the housing market, we have been in discussions with the lender regarding the Tustin Browning site and other associated properties being jointly developed by Southwind Realty Group and SunCal Companies. (The other two properties are Heritage Village in Santa Ana and Red Hill in Tustin).
Even though there was no upside for SunCal to pursue entitlement, we still proceeded with the business plan as part of the agreement, by seeking developmental approvals, because it was the right thing to do.”
Was it really “the right thing to do”? I’m guessing SunCal was thinking it was the right thing to do to show the bank that they were trying their best to move forward. What do you think? Should SunCal have disclosed this information before seeking approval from the City Council with the controversial property plan (controversial partly due to the local concern for increased traffic)?
The Bakersfield Californian also had a good article about SunCal’s downfall, “Big foreclosures close quietly“. The headline is catchy and also a good observation. We’re talking hundreds of millions at stake here with these large development companies foreclosing on properties. And yet, there’s not much major news coverage. Not a good sell or what?
