Starwood Seeks Loan to Revive Calif. Project
A joint venture headed by Starwood Capital is seeking about $230 million of financing to buy and finish a failed mixed-use redevelopment in California's Silicon Valley.
The Starwood partnership has agreed to pay roughly $180 million to purchase Sunnyvale Town Center out of bankruptcy. It plans to spend another $180 million to finish construction of a mix of condominium, office and retail buildings on the 34-acre site.
The Greenwich, Conn., firm is teaming up with Houston developer Hines and retail specialist Madison Marquette of Washington to revive the project, intended to create a traditional-style downtown in the heart of Sunnyvale, 10 miles northwest of San Jose.
The sale by court-appointed receiver Quattro Realty is scheduled to close next month. Market players said Starwood and its partners may be unable to lock up financing that quickly, but could complete the purchase with cash while negotiating with lenders. The joint venture is considering financing the project as a whole, or securing separate loans for the office, retail and condominium components. Eastdil Secured is advising Starwood and its partners on the purchase and financing.
Plans to build Sunnyvale Town Center on the site of a former mall date back more than a decade. Three different developers have tried, but failed, to complete the project.
The most recent effort began in late 2006. RREEF teamed up with Sand Hill Property of San Mateo, Calif., on a plan to build 1 million square feet of retail space, two office buildings totaling 315,000 sf, 292 condos, a 200-room hotel and a 14-screen movie theatre. It was to be one of Northern California's largest development projects, and at the height of the real estate boom it was valued at upward of $450 million.
The real estate crash wrecked the project, and it fell into bankruptcy after RREEF, the real estate advisory arm of Deutsche Bank, defaulted on a $108 million loan from Wachovia in 2009.
Hines will spearhead completion of the office portion of the project, while Madison Marquette will lead the retail development. One office building, with 156,000 sf, is complete and fully leased to Nokia. A second office building stands unfinished, along with partially built condo and retail structures.