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8/11/2010 Business& Financial News, Breaking US ... Friedman,the Sacramento developer, has been working to transplantthe Broadway loft lifestyle he had in New York City as a Salomon Brothers investment banker. Ten years after returning to Sacramento in 1991 to rejoin his family's property business,he created the citys first loft in a 1920s era building that also houses his offices.Today he senses more demand for urban life than ever before.In June, he broke ground on a 188-acre industrial site in West Sacramento, using $50 million in public money.The Bridge District's 12 million square feetwill include housing,commercial space and a waterfront park. Back in Rockville's town square,public and private entities splitthe$132 million cost roughly60-40."The public-private partnership is critical to making these work,"said Don Briggs,a vice-president of Federal Realty,one of the Rockville Town Square's developers."I'm talking about municipalities making an investment." It's paying off,say both sides of the town square partnership."It's a damn good investment,"said Sternbach,whose business cards are in both English and Chinese,which indicates what business she's wooing."We didn'twantto be Anywhere, USA." Federal Realty's Chief Financial Officer,Andy Blocher,concurs:"From a shareholder perspective,it's been a very strong project,"he said. But it's not all breakdancing on the square's bandstand,as Blocher can attest. Federal Realtys failure to secure a promised grocery store has angered residents.It has also disappointed the citys financial expectations for the project, said Gavin Cohen,Rockville's CFO. The recession has not helped, hurting both Federal Realty's rental income and Rockville's taxrevenue. And in Sacramento, public funding for The Railyards is now in jeopardy as real estate trust Inland American has accused Thomas Enterprises of defaulting on some$186 million in loans.Without resolution with the lender,California has informed Thomas that itwill freeze at least$30 million in construction grants,said Suheil Totah,a vice president at the firm. "Thomas is working hard to resolve the situation,"said Totah,who in an earlier interview noted itwas the recession that got his project moving byspurring infrastructure and stimulus programs. The downturn has dampened Friedman's expectations for his Sacramento project as well."Moving forward with construction now is more an act of faith than a hard-nosed calculation of future profit,"he said."The early phases of the project are likelyto make low single-digit returns --not enough to independently justify the risk." But like many other developers and politicians across the country,he is going for it."The economywill someday improve,"he said."We believe that there is unmet demand for a more urban and walkable style of development." In the end,however,profits are not the onlyreason people are creating downtowns and moving into them. Rockville "wanted a vibrant town square and that's what it's become,"said Cohen."They wanted it to be a destination and I think it is that." (Reporting by Helen Chernikoff in Rockville and AI Yoon in Sacramento;editing byJim Impoco and Claudia Parsons) ©Thomson Reuters 2010.A11 rights reserved. Users maydownload and print extracts of content from this website for their own personal and non-commercial use only.Republication or redistribution of Thomson Reuters content, including byframing or similar means,is expressly prohibited without the prior written consent of Thomson Reuters,Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. This copy is for your personal,non-commercial use only.To order presentation-ready copies for distribution to colleagues,clients or customers,use the Reprints tool atthe top of any article or visit:www.reutersreprints.com, http://www.reuters.com/assets/print?aid... 4/4