Big Banker reported March 17, 2018: "The Notice Of Trustee Sale on Sonora Shores was posted for foreclosure sale on April 3. The amount due is $14,386,901.90, cash or cashier's check. The Notice Of Trustee Sale was published in the Pacifica Tribune March 14, March 21, and March 28."
Big Banker reported March 5, 2018: "Sonora Shores luxury housing project on Fassler and Roberts Road has a 04-03-2018 foreclosure date. A Notice Of Sale has been recorded on the property."
Big Banker reported February 4, 2018: "On November 30, 2017, a Notice of Default was filed on Sonora Shores Harmony @ 1 project. This is the existing loan recorded April 30, 2014. The Trust Deed in the amount of $9,600,000 has swelled to $13,572,548.99. The loan was due to be paid in full by April 25, 2016."
Big Banker reported August 8, 2015: "As of the close of business Friday, August 28, there were no recorded liens or notice of default. First loan, $5 million. Second loan, $5.6 million. On February 17, 2015, a strange deed of trust was recorded by Sonora Shores in favor of Urban Land, a performance deed of trust, which normally means there is some kind of equity share agreement between Sonora Shores and Urban Land, a specific performance action that takes place when lots sell. The only items filed and recorded were the Declaration of Convents, Conditions, and Restrictions (CCR); and a subordination agreement on July 29, 2015 regarding the CCRs."
Click the Comments link below this post for the conversation thread on this controversial project that died on the hillside.
https://www.forbes.com/sites/chloesorvino/2015/01/27/successful-african-american-real-estate-mogul-inches-closer-to-billionaire-status/#7348a0127fc5
"Don Peebles is already one of the most successful African American CEOs in the country, but his recent building spree has put him one step closer to becoming a billionaire.
Forbes now estimates that his net worth is more than $700 million – and with several nine-figure developments underway, his fortune could very well keep going up. Peebles, 54, says he’s built up his six million square foot portfolio by picking deals that transform and open up opportunities. He’s known for weaving in $10 million and up apartments alongside redevelopment projects in some of the most impoverished areas in cities across the Eastern seaboard."
Posted by: Big Banker | March 23, 2017 at 09:05 AM
Peter: That's really interesting. I didn't know that he actually made money by losing the election. I did know that he lost nothing except time spent courting the locals, but that was time well-spent, apparently.
There was the additional terrifying prospect of Prop. 90 during that election. If that had passed, all bets would have been off, in terms of local land-use control. That was the brainchild of a New York-based real estate billionaire -- forgotten his name.
Posted by: Lionel Emde | March 23, 2017 at 08:29 AM
BB said, "Our mutual friend Don Peebles also has very deep pockets." Peebles is the perfect example of Intro to Real Estate: Play only with other people's money. He bought the quarry property for $5-6 million using a $16 million non-recourse loan. He spent $2-3 million more of that developing pretty pictures, hiring Andres Duany to spout his new urbanism philosophy and design concepts, and on the campaign to get the voters to approve 355 housing units in the quarry. He lost. Then he walked away with $8 million in profit and left the finance company holding the bag for the unpaid loan. Peebles didn't spend a dime of his own money, and he made money on the deal by defaulting on the loan.
I read his book. The one sentence that still is engraved on my brain is: "You make your money going in." In other words, he had made his money by borrowing the money and buying the property before he ever did anything. He was never going to make money by developing the property. Instead, he was going to increase his profits 100 times simply by getting the voter approval. He didn't get it, so he walked away with money he gained by defaulting on the loan. He had already made his money going into the deal. That how he does it – with other people's money.
Posted by: Peter Loeb | March 22, 2017 at 10:19 PM
Most of the property is designated as Open Space Residential, which requires a minimum of 5 acres per house; the rest is Very Low Density Residential, which requires 1/2 to 5 acres. In addition, it's in the Hillside Preservation District, which limits the site coverage to 6 acres. This restricts the development to the approved 12 units, and I believe it would require a General Plan amendment to change that.
Posted by: Larry Rosenstein | March 22, 2017 at 05:01 PM
Sonora Shores purchased the property on April 30, 2014. It pulled out one loan for $5,325,000, then the next recorded document is a second loan for $5,600,000. Then on December 8, 2016 it took out an additional loan for $9,062,000.
So what I see recorded on the property looks like it has three loans.
1st: $5,325,000
2nd: $5,600,000
3rd: $9,062,000
It looks like all three of the loans are currently on the property because subordination agreements have been recorded.
Three loans on a construction project and development project with only one sold lot is extremely rare.
Posted by: Big Banker | March 22, 2017 at 02:51 PM
Intro to Real Estate: Play only with other people's money.
Peter, not always. Some developers have very deep pockets and pay cash for every property they purchase. Friends of mine purchased a property with more than $18,000,000 of debt for $5,300,000 in cash the other day.
Our mutual friend Don Peebles also has very deep pockets.
Some developers are a cluster fart and can't finance enough money to buy postage stamps.
Posted by: Big Banker | March 22, 2017 at 02:45 PM
Likely scenario. It's interesting to me that a Canadian company is operating a U.S.-based LLC. The taxes are not friendly in Canada because it is taxed as a corporation and they can't pass them through as we do in the U.S. I seriously wonder how they can turn this around without volume housing up there. That's already zoned residential, so it's entirely up to the Planning Commission?
Posted by: Erin by the Beach | March 21, 2017 at 08:18 PM
"Instead we'd like to build 112 homes on 5,000-square-foot lots."
Or 1,200 condos.
Intro to Real Estate: Play only with other people's money.
Posted by: Peter Loeb | March 21, 2017 at 12:59 PM
Legalized Gambling 101 (supplemental course to Intro to Real Estate): Play only with the money you can afford to lose.
Posted by: Erin by the Beach | March 21, 2017 at 11:18 AM
It appears that only a single Harmony@1 lot has sold as of this week.
I suspect that at some point in the future we'll see the new owner in front of the Planning Commission stating: "Now that we've irreversibly built roads on the hillside, we can't make this project profitable with just 10 homes. Instead we'd like to build 112 homes on 5,000-square-foot lots."
Posted by: Dan Stegink | March 21, 2017 at 06:17 AM
Big Banker says he will get back to you tomorrow.
Posted by: John Maybury | March 20, 2017 at 09:05 PM
Thanks for the update on this, Big Banker. I've been wondering what's been doing up there lately.
Am I reading correctly that ~$27 million in loans have been taken out so far with the sale of only one lot to show for it? If so, yikes.
I'll echo Britt's request -- can you put this all into context?
Posted by: Chris Fogel | March 20, 2017 at 08:34 PM
BB: Can you speculate to the rest of us non-finance/real estate people what that could mean?
Posted by: Britt | March 20, 2017 at 05:19 PM
In December 2016, Sonora Shores took out an additional $9,062,000. It doesn't look like any of the previous debt was retired. Also, only one lot has sold as of close of business on Friday, March 17.
Posted by: Big Banker | March 19, 2017 at 04:20 PM
This Riptide story is again relevant RE: the $7.5M in new financing Sonora Shores recently acquired:
http://www.pacifica.city/forms/PAC_H1_finance75_031016_watermark.pdf
Posted by: www.pacifica.city | March 10, 2016 at 05:11 PM