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SUNNYVALE, CA-Court-appointed receivers are now in control of Sunnyvale Town Center, a 36-acre downtown redevelopment project that stalled 40% complete amid the recession—except for a big-box Target store that is nearing completion. The project was to include 900,000 square feet of retail and restaurant space, 315,000 square feet of office space, 292 condos and a 200-room hotel. The receivership is part of foreclosure proceedings initiated by lender Wachovia after the development partnership–Sand Hill Property Co. of San Mateo and equity partner Rreef–defaulted on a $100-million loan.

The receivers are Jerry Hunt and Quattro Realty Group, a new asset advisory firm led by Brad Blake; Hunt and Blake also own the development firm Blake Hunt Ventures. Wachovia and the receiver are being advised by Federal Realty Investment Trust and Wilson Meany Sullivan, respectively the developers of Santana Row retail development and The 88 condo development, both in San Jose.

The City of Sunnyvale, which OK’d the sale of the property to the Sand Hill-Rreef JV a previous developer failed to make it happen, expressed relief with the appointment of a receiver for the property. City Manager Gary Luebbers said says the global economic meltdown was occurring right about the time the Sand Hill-Rreef JV sought a second round of financing to complete the project. The developer was unable to secure the additional financing, and the project halted, he says.

“Our growing concern was that there could be significant damage to the partially-built project if it not protected from the coming rain and winter,” Luebbers said. “That concern can now be set aside… .”

Target, which acquired its land from the developer, continued to build out its 180,000-square-foot store despite the developer’s inability to obtain construction financing for the rest of the project. A grand opening for Target is scheduled for Nov. 15. It and an existing Macy’s, which also owns the land beneath its building, will be the only retailers at the development.

The City says that in order to “both support the opening of the Target store as well as to further improve the entire project,” it brought together the involved companies and came up with $8 million to complete the development’s curbs, sidewalks, landscaping and lighting. What happens next will depend on the receiver’s analysis. Dozens of liens have been filed by the general contractor and subcontractors.

Sand Hill owns Sunnyvale Town & Country, which sits next to Town Center Mall and also was slated for redevelopment. The previous Town Center developer was Atlanta-based Forum properties, which decided to sell shortly after it got started on the redevelopment.

The redevelopment of Sunnyvale Town Center came to a halt in early 2006, shortly after Forum Properties demolished a parking garage on the site. Local industry sources say Forum could not come to agreement with Macy’s and Target with regard to the mall’s redevelopment. Toward the end of that year, the city found Forum in breach of contract and made moves to take over the project. That’s when Forum began talking with Sand Hill Property about a sale.

Joining Blake and Hunt in Quattro Realty are Brad Griggs, the former chief investment officer for BRE Properties and the current principal of CenterStreet Housing, who also recently joined the investment committee board of Tribeca Cos., and Michael Parker, founder of ExTerra Realty Partners and a former senior partner with Koll Development Co. All four are now managing principals at Quattro while also continuing to operate their respective businesses.

Blake says Quattro will specialize in assisting banks, special servicers, investment managers, institutions, corporations and government agencies in evaluating, advising and implementing clear action plans for challenged real estate. “We don’t have legacy issues that bog down other firms,” he says, “but we do have a legacy of successful execution on large and complex real estate developments and investments across all major asset classes.”

The foursome’s experience includes being among the top executives of three public REITs, three private REITS, and several other companies. “We felt the combination of our capabilities would offer more than the sum of each part, especially as more real estate assets are in work-out, are being foreclosed or given back to lenders,” Parker says.

“We initially conceived Quattro to provide ‘conflict-free’ advisory services with many of our existing and ongoing banking and investor relationships,” Griggs says. “But we soon realized that Quattro was uniquely positioned to be a market leader in the advisory services business given the large demand for our combined experience across multiple real estate asset classes.”

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