Jun. 2--Sacramento developer John Saca on Thursday signed a $375 million loan agreement that will allow him to start construction this month on the region's tallest building, a 54-story twin condominium and hotel project near the state Capitol.
Saca signed the deal -- likely the largest ever for a privately financed construction project in the region -- with Germany-based Deutsche Bank. It is the final piece of the financing puzzle that he needs for the Towers and will quiet naysayers who have criticized the 600-foot-high project as unrealistic.
"A lot of people didn't think that I'd get this done. They said that there isn't a market here," Saca said. "This proves that I was right. We're creating the market."
Officials at Deutsche Bank's New York office confirmed the firm signed the pact Thursday morning, but declined to talk specifically about the Towers project.
Many in the commercial real estate community derided the Towers as an overly ambitious $500 million dream, particularly for a city that has no high-rise condos, even after Saca landed the giant California Public Employees' Retirement System as a $100 million investor in April. Saca is using his own money for the balance of the project.
Al Gianini, who heads the local office of commercial broker CB Richard Ellis, admitted Thursday that he was among those early doubters.
"I was talking to someone in commercial real estate the other day about what's going on downtown," Gianini said when informed of Saca's deal with Deutsche Bank. "We almost think that some of us have been in Sacramento so long that we have trouble seeing what's in front of us."
Outside investors with high-rise development experience in other communities are coming into Sacramento, sending an objective signal that the market is ready for high-rise development, Gianini said.
"What's amazing about (the Towers) is that there was no intermediate step," Gianini said. "It's like going from zero to warp speed."
Sacramento officials greeted the Deutsche Bank news as a sign the city is maturing and praised Saca's vision.
"He's on the cutting edge, pioneering a product that has never been seen here before," said Sacramento development director Bill Thomas. "John will be the fifth and sixth crane on the skyline that we'll see later this year, and the largest project under way on the West Coast."
Over the past few years, other developers have caught high-rise fever. Danny Benvenuti has said he wants to build a 31-story condo-office tower at Seventh and L streets. Angelo G. Tsakopoulos has submitted plans for a 25-story granite and glass building topped by a two-story penthouse at 500 Capitol Mall.
Construction is under way on David Taylor's 25-story U.S. Bank Tower at Seventh Street and Capitol Mall.
Meanwhile, Denver developer Craig Nassi is taking non-refundable deposits for his 38-story Aura condo tower next door to the Taylor project. He recently secured $100 million in financing from Chicago-based Corus Bank and signed Tishman Construction Corp. of New York as the builder.
The ultimate test for Nassi, Saca and others is how many condo units they can sell. Units in the Towers and Aura go for around $600 per square foot.
By comparison, homes that sold this year for $500,000 or more in El Dorado, Placer, Sacramento and Yolo counties fetched an average of $309 per square foot, according to DataQuick Information Systems, a research firm based in La Jolla.
Nassi said Thursday that he has taken non-refundable deposits on "the majority" of Aura's 265 units, selling for between $386,000 to $1.24 million. In April he told The Bee that three-quarters of the units were sold during a three-day grand opening.
"We still have units left and we're selling every day," Nassi said. "We're not holding back anything."
Saca said that "about 200" buyers have put down non-refundable deposits of 10 percent of the cost of the condos in the Towers, where units sell from the high $300,000s to $6 million. His sales staff continues to schedule daily appointments with prospective buyers.
"Things are moving along really well," Saca said. "This thing is going to happen."
(Sacramento Bee, The (CA) (KRT) -- 06/05/06)