Developer Reports Financing Secured for One Colorado
One Colorado project supporters hope that the announcement of a construction loan of more than $67 million and the entry of a Japanese financial partner reportedly willing to pay more than $13 million to join the project will finally put an end to rumors plaguing the development.
For months, speculation about financial backing being withdrawn swirled around one of developer Douglas Stitzel’s partners, Berisford Pasadena Ltd., a subsidiary of the giant English company, Berisford International. Now, the Japanese firm Yasuda Trust & Banking Co. Ltd. will provide the construction loan and Trela Pasadena Inc., another Japanese firm, will become a partner, Stitzel announced.
But before this latest development, and more particularly after a confidential prospectus made the rounds in Pasadena, there was talk of a Berisford pullout and of financial instability. A city official who has worked on the project, however, said that the wariness caused by the prospectus was unfounded.
“In real estate, that’s typically how things are done to get a third-party lender,” said Marsha Rood, a city development operations administrator who has helped guide the One Colorado project through city channels for the last five years. “I don’t think this is out of the ordinary.”
Berisford International, a London-based holding company dealing in food, real estate, commodities and financial services, was to have played a key part in construction of the project because the giant company had guaranteed it would find funding for the $70-million project or bankroll it itself.
So city officials, Pasadena residents and Old Pasadena merchants placed nervous calls to Stitzel, seeking reassurance.
The talk reached such a pitch that Stitzel and his vice president, Pam White, threatened to sue the unidentified rumormongers.
“This is extremely unlike every other project I’ve developed,” said Stitzel of the rumors. “We’ve had to fight these things constantly.”
But the mistrust that the project will become a reality may be as much a part of One Colorado as the historic buildings that sit on the project site.
The city’s hopes for revitalizing Old Pasadena rose in 1981 when television producer Garry Marshall and entrepreneur John Wilson began buying dilapidated buildings in the block bounded by Colorado Boulevard, DeLacey Avenue, Fair Oaks Avenue and Union Street.
Two years later, Wilson announced plans for an upscale shopping complex to be called the Marketplace. By 1985, Marketplace plans had ballooned to a $106-million, glassed-in complex that included a 150-room hotel, a gourmet grocery store and rooftop restaurants.
But those ambitious plans collapsed in 1986, when Wilson’s lender pulled out. A scaling-back of the project to $60 million failed to revive it and that project finally died in a flurry of suits before Stitzel acquired the site in December, 1988, and renamed it One Colorado.
Coming into the project as its rescuer, Stitzel believed his path would be smoothed if he rejected Wilson’s plans for a glassed-in mall and preserved the historical structures, said Stitzel’s Los Angeles attorney William Cathey.
Instead, Stitzel ran smack into preservationist Claire Bogaard, executive director of Pasadena Heritage. The group objected to Stitzel’s plans to remove interior walls and modify some storefronts in the project’s 100-year-old buildings. Members believe changes to seven buildings could be extensive enough to threaten the structures’ listing on the National Register of Historic Places.
Before the project was approved by the Pasadena Board of Directors, Stitzel said he negotiated with Pasadena Heritage over changes the group felt necessary in the project. But after the changes were made and the project approved, Pasadena Heritage continued asking for more changes, Stitzel said. When he refused, Stitzel said, “the rumors started springing up.”
The negative rumors have not harmed the project but they have created unnecessary work for Stitzel and his employees, Cathey said.
“It’s very troublesome to have someone at the city call and say that Berisford wants out,” he said. “It worries the hell out of other people in Old Pasadena. They call up and say they’ve heard the project’s not going to go. It’s just a pain to have to keep answering things like that based on unsubstantiated rumors.”
But Sue Mossman, Pasadena Heritage program director, said her organization is as much a victim of rumors as Stitzel.
“We hear all this stuff from other people,” Mossman said. “It raises questions and we end up asking legitimate questions about the project.”
The most recent questions centered on the One Colorado prospectus circulated by Dillon, Read Real Estate Inc. of New York. The prospectus was seized on by project critics as proof that Berisford was discontented with Stitzel and wanted out of the project.
Yet, such a prospectus is standard in real estate development deals, said Rood, the city development operations administrator.
Berisford never wanted to pay for the $70-million project and intended all along to find a financial institution to provide money for the project, Stitzel said. Because of skittishness by city officials stung by past experience with the project, Berisford was required to provide letters to city officials guaranteeing funding if a construction loan could not be secured.
Now that loan has been secured, as well as a new financial partner, Stitzel said. More than $67 million will come into the project from Yasuda, and more than $13 million from a fourth partner, Trela, a subsidiary of Toshoku Ltd., the 10th largest trading company in Japan, said the developer.
“Berisford is not getting out, we’re all staying in,” Stitzel said. “The financing is actually better than what we requested in the prospectus because there was a lot of competition for it.”
Under a reorganization of the partnership, Trela will take over 50% interest in a new partnership to be called One Colorado Associates. The previous partnership, Pasadena Preservation Associates--consisting of Stitzel, Berisford and Above Market Partners, a company controlled by San Francisco developer Leslie Schilling--will hold the remaining 50% interest. The arrangement will reduce by half each of the three original partner’s previous share in the project, Cathey said.
Yasuda Trust & Banking will provide more than $67 million to cover $56.5 million for construction and $10.1 million to pay off a bond-financed, 850-space garage built in 1985 across the street as part of the project, Stitzel said.
In the prospectus, Stitzel asked that the new partner provide $8 million to Pasadena Preservation Associates to pay back all money spent on the project so far and an additional $5 million upon completion of construction. But the agreement struck with Trela was an improvement over the prospectus request, he said.
Meanwhile, Stitzel continues to work on other aspects of the project. The developer is obtaining a $6.9-million completion bond required by the city of his general contractor, Peck-Jones Construction/Plant Builders. City directors required this second guarantee to cover the project’s first phase, construction of a multiscreen, AMC movie theater and shops.
Although the Board of Directors gave preliminary approval to the bond last month, Stitzel still must find a surety company to issue the bond, said Rood.
Stitzel also is negotiating with companies that would lease up to 50% of the 260,000-square-foot project, he said. Although Stitzel declined to identify his possible tenants, the prospectus listed possible tenants such as Polo, Conran’s, Nature Co., Crate and Barrel and Eddie Bauer.
Finally, bulldozers will probably began rumbling onto the site to begin construction in June. Despite the hoopla of a March 19 groundbreaking, Stitzel won’t be submitting building permits for another month, Rood said. The delay occurred because the groundbreaking had been set far in advance and he expected to have his permits by then, Stitzel said.
“In another city, it wouldn’t even have been noticed,” Stitzel said, “but this project is so under the public eye because it’s been stalled for so long.”
