Is Capital Pacific Holding Helping to Buy 11 State Buildings?

According to state records, one of the investors in California’s $2.3 billion sale of 11 state office buildings is a Newport Beach company founded and run, until 2008, by Hadi Makarechian, a contributor of more than $314,000 to Gov. Arnold Schwarzenegger since 2003 and nearly $175,000 to ballot measures backed by the GOP governor.

Makarechian, 62, a long-time real estate developer and investor, was appointed by the GOP governor as a University of California regent in 2008.

A representative of the company Makarechian founded, Capital Pacific Holdings, Inc., said, however, he knew nothing of the company’s investment in the sale of the state office buildings.

“We’re homebuilders,” sad Matt Kern. “I haven’t heard that we’re involved in any of that.”

Makarechian was traveling and unavailable, his office said.  Kern said Makarechian was still an owner and officer of the company.

In his biography as regent, Makarechian says he retired in 2008 as chief executive officer and chairman of Capital Pacific Holdings, Inc., which he founded in 1991.

Capital Pacific Holdings is listed as one of nine “additional equity investors” on documents sent to lawmakers by the state Department of General Services on October 11, notifying them of the Schwarzenegger administration’s decision on who to sell the buildings to a consortium calling itself California First, LLC.

“When we put the letter together for the Legislature we based it on the investors identified to us by California First during the process,” said Eric Lamoureux, a spokesman for the department.

Leading California First is Hines Interests, a Houston-based international real estate firm and ACRE LLC, a private equity firm headquartered in Irvine and New York with an office in Mumbai.

ACRE stands for Antarctica Capital Real Estate, a consortium of investors created to bid on the state buildings.

The entity is an offshoot of Antarctica Capital whose principal is Chandra Patel is an international private equity firm.

Also participating in ACRE is Rich Mayo, a long-time real estate broker and developer in the Low Angeles metropolitan area.

Michael Bustamante, a spokesman for California First, said he knew no details of the additional investors including Capital Pacific Holdings.
In a November 5 letter to lawmakers, the Legislative Analyst was critical of the lack of detail about how the $2.3 billion bid was won by California First LLC.

“We find the paucity of information regarding this major state financial transaction to be troubling,’ said the 12-page letter.

Lamoureux said the state was following the same practices it uses in other real estate transactions – not divulging other bids to maintain the “integrity of the bid process” and ensuring the state maintains leverage if the selected bid falls through.

After settling on California First, the state has recently released information on other bidders.

Makarechian’s biography as a regent says he remains chairman of the board of Makar Properties and Banning Lewis Ranch Management Company.

Makar, short for Makarechian, is run by his son, Paul.

Makarechian the elder was a key fundraiser for GOP Presidential candidate Mitt Romney, hosting a $1 million fundraiser for the candidate at the St. Regis Monarch Beach Resort & Spa in Dana Point.

The luxury resort was developed by Makar.

One of Makarechian’s developments of large multi-million beachfront homes was the genus of the term, “McMansions.”

Makarechian’s contributions to Schwarzenegger a $78,800 contribution to his initial campaign for governor in 2003, $125,000 to Schwarzenegger’s California Recovery Team and $150,000 to Citizens to Save California, the 2005 committee created by the GOP to pass Propositions 74, 76 and 77.

All three were rejected by voters.


Filed under: Budget and Economy


  1. I guess I don’t fully understand the transaction: The State sells its office buildings to cash flow last year’s unbalanced budget–once proudly pointed to with pride–leaving the question, what is left to sell to cash flow this year’s unbalanced budget?
    One possibility? The Leg, but I fear it’s already been sold.

    Comment by lotuslover — 12.03.2010 @ 9:29 am

  2. One could assume there might be state employees in some of these buildings that will continue to be there. So, the state becomes a
    renter. What’s the net to the General Fund? I recall you people decided to sell the utility power plants and that whole experience was a disaster. Any of the same people involved this time?

    Comment by D. Trump — 12.03.2010 @ 10:22 am

  3. See other contributions made by businesses tied to the Makarechians.

    “Makar Management” ($41,250 for election cycles 2004, 2006, 2008, 2010)
    “Capitol Pacific Holdings” ($33,950 for election cycles 2004, 2006, 2008, 2010}
    “Makar Properties”($250 for election cycles 2004, 2006, 2008, 2010)

    Find more at http://maplight.org/california/contributions

    Jeffrey Friedman
    Research Director, MAPLight.org
    jeff@maplight.org | 510-868-0894

    Comment by Jeff Friedman — 12.03.2010 @ 10:28 am

  4. There is way more criminal activity going on than just this- this is only the tip of the iceberg. “Also participating is Rich Mayo” … he is more than participating. Rich Mayo is one of Pete Wilson and Arnold’s best friends. He served in Pete Wilson’s cabinet during his time as governor – funnily enough in the Real Estate department. And guess which buildings he was involved in the building and purchase of? The best buildings – the ones that he is now buying for a fraction of their value. He heads up the company that mysteriously won the biddgin by a mere $200k… that is pennies when the bids are billion$$$. The bids were supposed to be closed, but they have only been closed to the public. Also – why is the Reals Estate Department (RESD) suddenly not good enough for Arnold? He hired a private sector brokerage to handle the sales – at a cost of 15% of the proceeds. This deal reeks and Arnold is a crook!

    Comment by Babs — 12.06.2010 @ 8:49 am

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