Largest Sacramento Condo Tower in Default

The largest condo hotel tower on the west coast by developer John Saca is in dire straits after he defaulted on a $22 million dollar loan for the project.  The Towers or Sac Towers as it has been sometimes called has a prime location by the river on the edge of downtown Sacramento.  I have had “high” hopes for this project for a year now and have been following it closely.  My wife’s family is from Sacramento and I have visited the site several times.  NCO had actually been in talks with the developer and the marketing company initially representing them about everything from advertising to bulk purchasing 30% of the units.  Since that time the project has gone through a series of ups and downs and been put “on hold” multiple times.   John Saca, who is best known for retail development, has plans for a very ambitions project for which the timing may not be ideal.  Construction costs for these Sacramento condos have put the project in jeopardy since day one.  Construction stopped in January when contractors filed liens against the developer for millions in unpaid bills.  The total project development costs total $570 million.  The principal financial partner of the development is trying to determine whether the project is worth moving forward on.  They have brought in a Los Angeles based developer to help determine if the project can be saved by scaling down the model a bit.   Many units have actually been sold in the pre-construction phases, but all buyers with deposits hold money in the escrow account and will get a full refund.  Many people obviously want to see this condo development move forward because it will change the face of the Sacramento skyline forever.  The question is whether those building the project can come out of this venture alive!! The Sacramento condo market is much like many of the other markets in California but has not been hit quite so hard during the market shift.   The area has not been drastically overbuilt and never had the influx of speculators that San Diego and Los Angeles did.  Sacramento and the surrounding suburbs still have plenty of developable land as well.  They ca still build out her than up.  More to come…