SACRAMENTO - After years of planning and investment, Georgia developer Stan Thomas lost control of the largest infill project in the country at a courthouse foreclosure auction Friday afternoon.
The 240-acre downtown Sacramento Railyards went back to the lender, a subsidiary of Illinois-based Inland American Real Estate Trust, after nobody offered a bid at the company's opening price of $50 million.
Thomas Enterprises had borrowed $186 million from Inland American, and with fees and penalties owed the trust nearly $200 million, said spokesman Matt Tramel.
The $50 million opening bid was the value of the second mortgage, Tramel said. Inland American would have still owned the first deed of trust, which takes priority over the second.
Inland American immediately released a written statement to reporters gathered at the courthouse, expressing the company's desire to develop the Railyards on its own:
We are pleased to move forward. Inland American can now start to roll up its sleeves and work with the city of Sacramento and state agencies to allow the project to proceed. We look forward to working with the community to redevelop this important part of the city.
Assistant City Manager John Dangberg, who was present at the auction, said Thomas had been a good partner in securing state and federal grants for the project. He said the city would have been happy to continue working with Thomas, but said he was confident in Inland American's committment to the project and its ability to keep it moving forward.
Inland American said Thomas Enterprises would serve in a consulting role during the ownership transition. The company said it was already assembling a project development team for the Railyards and was in the process of establishing a local office.
The company said Thomas Enterprises had agreed not to try to hinder the foreclosure process and as a result had been given a first right option to buy back the Railyards over the next 18 months for what it owed Inland American.
Inland American promised a more extensive update on its plans and progress within two months.
The original Railyards plan called for thousands of homes and hundreds of businesses along with a major transit center. Thomas Enterprises had said there was also room for an NBA arena if the community and the Sacramento Kings wanted to build one there.
According to a company fact sheet, Inland American Real Estate Trust owns or controls 980 properties representing 48 million square feet of retail, industrial and office properties along with 10,154 multi-family residential units and 15,146 lodging units.