Japanese Acquire Majority Interest in Plaza Project

Japanese contracting giant Shimizu Corp. has acquired a majority interest in the $171-million Great American Plaza office complex under construction in downtown San Diego, Great American Bank announced Thursday.

The announcement capped a two-year search for financing by Great American, a $16.4-billion savings and loan based in San Diego that will move its headquarters to the site when construction is completed in 1991. Shimizu Land Corp., the Japanese firm’s American development subsidiary, will be general partner of the project.

The entire Great American Plaza project will consist of a 34-story, 650,000-square-foot office tower and a 272-room Guest Quarter Suite Hotel. The plaza will also include the Transportation Galleria, a fully enclosed station for the San Diego Trolley, which will slice diagonally through the 3-acre site. The project will also have 22,400 square feet of retail and restaurant space.

Shimizu and Great American will be partners in all components of the project except the hotel, which will be owned and developed by Starboard Development Corp. of San Diego, which helped put together the development package. Hotel financing has yet to be secured.

The developers have also received a $156-million construction loan from Mitsubishi Trust & Banking Corp. and Dai-Ichi Kangyo, two of Japan’s largest banks.

Shimizu, which booked $10 billion in worldwide revenues last year, already has an ownership interest in one other San Diego project, the $150-million Aventine office-hotel-restaurant complex under construction in La Jolla. Shimizu also has invested in commercial projects in Atlanta, Hawaii, Los Angeles, Phoenix and Palm Beach, Fla.

“We started a worldwide search for a quality partner more than a year and a half ago,” said Marc W. Sandstrom, a Great American senior executive vice president. “But nothing was finalized until last week.”

Reports had circulated for weeks that Shimizu was to become an investor in the project, which is across Kettner Boulevard from the Santa Fe train depot. Sandstrom declined to specify how much cash Shimizu is contributing to the development, but did say that, “as the general partner, they are making a substantial commitment.”

Brian T. Galligan, real estate development manager for Shimizu’s Los Angeles-based construction and development subsidiaries, said the company sees “a bright future for the San Diego area and believes that there are many great investment opportunities there.”

Galligan said Shimizu’s investment strategy differs slightly from that of other Japanese companies that have shown a voracious appetite for existing “trophy” properties.

“We have never just acquired an existing project,” he said. “Most of our investments are driven by construction opportunities. Instead of just buying a trophy project, we’re building them.”

Sandstrom said Great American’s objectives at the outset of the project were to construct a fixture that would develop value for its shareholders and to avoid committing a substantial amount of its own financial resources.

“We never had any intention of financing this project by ourselves,” Sandstrom said. “Great American’s primary business is residential lending, not financing office towers. We didn’t want to have a major commitment.

Although financing had not been secured, ground breaking and excavation for the underground garage began in May because the developers have promised the Metropolitan Transit Development Board to have trolley tracks cross the site by June, 1990.

The transit board, the public agency that operates the trolley system, is in the midst of expanding its system by adding a “bayside loop” that will go through the Great American Plaza and provide service to the new San Diego Convention Center.

Sandstrom said Great American provided funds for the excavation, which was completed about a month ago, under the condition that it be reimbursed when a complete financing package was secured. No other construction work has been started.

Architect is Helmut Jahn of Murphy/Jahn of Chicago. General contractor is M. H. Golden.