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Rumor: Pyramid Ceasing Operations

Author:Steve Patterson April 18th, 2008

If the rumor is true developer Pyramid Cos.will cease operations today. With numerous projects on the books, this is a challenging time to be a developer. Even harder to be a developer in debt. From a Business Journal article from the start of the month:

Development firm Pyramid Cos. is weathering the turmoil in the housing and credit markets through staff cuts and a cash infusion from its main financial partner, Connecticut-based Spinnaker Real Estate Partners LLC.

Meanwhile, Spinnaker, led by Clayton Fowler, has doubled its financial commitment in Pyramid’s planned downtown redevelopment projects, said Amos Harris, principal of St. Louis-based Brady Capital and a partner in Spinnaker’s local development entity. Spinnaker originally committed about $8 million to four projects: the former St. Louis Centre mall, the former Dillard’s building, the Mercantile Library building and the Jefferson Arms. That figure has now doubled to an estimated $16 million, although neither Harris nor Steffen would divulge the exact dollar figure.

Pyramid has done some fine projects over the years but also some that are questionable like the Sullivan Place senior apartments. I spent quite a bit of time in 2006 fighting Pyramid’s plans to swap land that would have resulted in a relocated Mcdonald’s drive-thru on South Grand.

Remember this is just an unverified rumor at this point. Take with a hefty grain of salt at this point.

[UPDATE 4/18/08 @ 3:35PM --- Confirmed. Employees were, I'm told, given final paychecks and told to cash them quickly.

UPDATE 4/24/8  4pm  --- Finally this story makes it to traditional media --- from kmox "St. Louis (KMOX)  -- "The developer of major St. Louis projects...St. Louis Centre and the former Dillard's building, in the Mercantile exchange project...is getting out of the development business. Pyramid Construction's John Steffen made the announcement through Steffen's attorney Attorney Steven Goldstein... Problems in the real estate lending market are the main reason. Goldstein says Pyramid is currently working with other developers, investors, lenders and the city to make a transition for its development projects...but will continue to operate it's property management division...which oversees a thousand apartment units in the city and surrounding area." ]

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  • Steve,

    I am glad that you are improving.

    All,

    Please come to Cherokee Street for Cinco de Mayo. It will be Saturday May 3, 2008

    http://www.cincodemayostl.com/
  • Jim Zavist
    According to the local news today, Pyramid is getting out of the development game, but staying in the management game. I have to give them props for trying to transition their existing projects onto other developers (instead of just pulling the plug and shutting down), but it does suck for the employees being let go . . .
    [slp --- Well, they've got millions tied up in these projects and owe millions to lenders --- they have little choice but  get others to take them over --- otherwise it will be hard for them to hold onto finished income producing properties .] 
  • jennifer florida
    I am glad that you are making such good progress, Steve. The Pyramid rumor is deflating.
  • zink
    I dont understand,
    Can you exaplain which outfits of Pyarmid are ceasing operations?
    I ran into a Pyarmid Employee from Dorsa, they were working this weekend showing the units... So unless she is working for free... that friday wasnt her last paycheck.
    [slp --- I would imagine the folks that help bring in revenue --- sales & leasing --- would remain for the time being.  Until they work out all their debt with the creditors it is hard to say what will remain.]
  • SillyLocals
    The money market is very liquid, in fact the Federal Reserve has expanded the base of acceptable borrowers. The typical lenders, especially banks, are repricing assets and are unpleasantly surprised. Companies that refuse to see the obvious, like many locals, will fail and many more will folow. Projects may resume, just like BallPorkVillage.
  • These projects will resume. When the economy gets better, and the money market isn't so tight, they'll be rehabbed.
  • ExStlGal
    It couldn't have happened to a nicer guy. All the accolades for this company sickens me. John was or is no hero to the City of St Louis. John is a shrewd businessman who capitalized on a market that most people ignored. In a time of boom, or in St Louis' case, a steady market, the City fared well. John fared VERY well. His employees suffered from time to time. With promises that would not be kept. With hopes and dreams about being "part" of something rare and special. The fact of the matter was that it wasn't rosy. It came at a price to those who were loyal. Pyramid struggling and breathing down deaths door has happened manytimes before and the cat does eventually die after nine lives are expended. I still believe John (the cat) has more lives in him. He's a survivor who knows what it takes to scrap his way from the bottom to the top. However, he has not learned very important lessions regardless of how many lives he's expended. He has not learned to cut the cords of those who are loyal but clueless and incompetent. He has not learned how to diversity. He has not learned that when you're on top of the world everyone loves you and when you're in the bottom of the cesspool, no one returns calls. Perhaps in his next life.
  • Adam
    "…careful now, you don’t want to be accused of namecalling."
    .
    guess it's a good thing i didn't.
  • the-end
    Steve was correct. Just because three or four people are tying up loose ends doesn't mean much. I can confirm this also, it is no longer a rumor. It's very sad and hopefully everyone can find work elsewhere. This will be a long ugly summer, not just for the St. Louis economy.......
    [slp --- we need to keep those who lost their jobs in our thoughts.  We also need to think about the various companies out there that are owed money from Pyramid.] 
  • john w.
    ...careful now, you don't want to be accused of namecalling.
  • Adam
    "I think my name says it all…
    And by the way…
    “I spent quite a bit of time in 2006 fighting Pyramid’s plans to swap land that would have resulted in a relocated Mcdonald’s drive-thru on South Grand.”
    …maybe if you shoud consider supporting some development rather than constantly bashing it."
    .
    looks like someone's still bitter about not getting a new mcdonalds! take your own advice, "GetALife."
  • My heart goes out to all the people of Pyramid and their families (from John Steffen on down). I know that none of this can be easy for any of them. Unfortunately, Pyramid was not a public corporation, and that means that if this 'thread' is true, no one wins in this instance. Those folks at Pyramid seemed to have been on to something, as far as a future vision for the revitalization of Downtown St. Louis, and I only pray that it still comes to fruition! Their (spiked punch) dream of an infusion of street-facing, street-level retail in the MX directly across from the America's Center could have done nothing but been the surge of electricity that Saint Louis needs to compete with National Markets and done wonders for tourism (directly bringing in more revenue for the City). It was refreshing to dream once again and think that Saint Louis is not full of stodgy, greedy, old conservatives who fear change and progressiveness... but alas I guess the ole sobering Lou perspective has reared its ugly head once again and killed its best chance at finally embracing much needed, radical change! I hope the other developers are doing well and still pushing forward on progress! Ultimately, I guess I'm trying to say that despite the difficulties ahead for John Steffen, his employees and their respective families... I think Saint Louis will take the bigger hit and suffer the most for losing a visionary company like Pyramid. Their team effort and past success should be honored and tauted at a time like this, in hopes of encouraging someone to pick up the pieces and be as good of son as John (aka Pyramid) Steffen was to this city. My prayers and heart go out to all affected by this news, if it is true!
  • Onceadowntowner
    You know, you had me for a while. Until you put this up:

    "my source is very reliable. I placed a call to verify but it seemed nobody was around to answer the phone."

    So, because no one answered your phone call, then it is true? I feel like I'm watching an episode of "Really! with Seth and Amy" on Saturday Night Live.

    People do still work there. Department heads were not allowed to inform their employees because they are working on trying to find a solution in lieu of shutting down completely.

    For someone who is usally so good about getting facts straight, you're a bit shoddy on this one. JMO
    [slp --- I made an attempt to verify what my reliable source was telling me. As I was unable to verify I made the decision to go forward as a "rumor." Having a couple of VP's around still to clean up the mess does not mean they are not ceasing day to day operations.]
  • john
    Liquidity is the life blood for corproations and it has been a worsening problem in the last four years, for both private and public entities. According to bond rating agencies, the number of companies given the lowest liquidity ranking has spiked to an all-time high in 2008.
    - -
    StL is not immune or isolated from these broader trends and in fact has been made more vulnerable. A weak economy, delayed infrastructure improvements, increasing unfunded health and retirement plans, a decaying school system, decades of depopulation, etc. are the macro-trends.
    - -
    Infrastructure spending and leaderships' attention has been focused on the Metro Extension, the New 64, Lambert extension,...as other and more important assets are being ignored. These problems have been obvious for years but the public's attention has centered on loft developments and BPV. The spiked punch bowl of unrealistic dreams should have been taken away years ago and now the fallout is becoming the "new reality", just like the New 64.
  • Pyramids
    Pyramid has pulled out of the Mercantile Exchange project, but nothing else yet. The company still exists. Employees still work there. This post is way undersourced.
    [slp --- Two employees remain to handle the transition --- these things don't happen instantly.The fat lady is making her way to the stage.] 
  • That really sucks for the employees of the company. My heart goes out to them.

    It could also suck for the city's architecture. What does this mean for the Arcade Building?
  • GMichaud
    The senior center on South Grand had construction workers doing various things today (Saturday). I believe that is Pyramid. It wouldn't be going unless Pyramid could pay them. I wouldn't think a transfer of tax credits etc could happen overnight so there has to be some company structure left. What about the Arcade building downtown?
    The City made a guarantee for St. Louis Center. How does that make citiizens of St. Louis liable and is that liability transferable to the new developers?
    It is all too bad of course, people lose jobs and the like, but this is only a symptom of a deeper cancer in society. America has so far to go, oil was a problem in the eighties and here we are 30 or 40 years later and now it verges on a crisis situation because nothing has been done to make America energy independent in the last 40 years. The whole society is mismanaged like that. Thus the Pyramid failure is no surprise, it may be one of many to come.
    We're sitting on our f***g hands.
    [slp --- I can imagine a subcontractor on the site but I would not make any assumptions about then getting paid.] 
  • Margie
    Wow. This IS bad news. I was so hopeful about St. Louis Center and that awful bridge coming down.
    .
    On a separate angle ... wow again, leave it to Steve Patterson to scoop this ... with one arm, from a rehab facility six hours from St. Louis. Steve, you are a force.
    .
    People, don't blame the messenger, and don't question his ethics. Clearly Steve checked this out.
  • This is sad news, but not completely out of left field. I have been following Pyramid from an architectural perspective since 1998 when I moved to St. Louis. I was impressed by the interest they were taking in the city at the time when there was, from an outsider's perspective, not too much going on. Sure there was progress, but they knew how to market it and make it visible. I know people who work for Pyramid Architects and my heart goes out to them. I hope whatever they do will be successful and profitable. I am assuming it affected both the construction and architectural divisions. Is there any word of a spin off? Pyramid also had their real estate side. Any word what is happening to that? When I say it was not completely unexpected, I feel they had lost focus along the way. They were known for their lofts and urban infill projects back in the day, but I am not sure what they have been doing recently other than the obvious projects that have been in the news. From what I could see they failed to diversify and were largely affected by the housing crunch. That coupled with the issues they were having on some high profile developments and the associated backlash, it is difficult to dig your way out of something like that.

    I look forward to the staff of Pyramid going on to do bigger and better things for the city and wish them all the best of luck.

    Finally I want to thank Steve for blogging about this. I know he is getting alot of flack for the tabloidness of this posting, but I also know his ties to the company and its employees. In this instance he probabably has more history and insight than most. While his choice of lead in could have been worded differently, and if he hadn't been out of town and in the current situation he is in, would probably have gone in depth with photos and links to all the various aspects of St. Louis development that this news affects, I appreciate the info nonetheless.

    Jason
  • An example of why the City should NEVER sign on our credit for private projects.
  • keep it positive
    One of my immediate boss' told a client (pointing to a rendering of a Pyramid project) that "it is dead" "it's not going to happen". I thought, why is my boss telling this client that?
    .
    I think the rumor is true, based on my immediate boss' comment. And yes, we are close to the pyramid developers.
    [slp --- As my update at the end of the article notes, by this afternoon, it was confirmed.  I went with it based on a close source labeling it as rumor simply because the other shoe had not dropped at the time.  The writing has been on the wall for some time now.  I've been getting little bits of information for months but I didn't go with it --- even though I had verified information.  This should not really be a surprise to anyone that has been paying attention.]
  • While I don't doubt that this could be true, I agree with Onceadowntowner. Everyone loves a scoop, but something of this magnitude should really be more properly verified. People tend to forget to notice the word "rumor" in situations like this. Don't become the Fox 2 of the St. Louis blogging world.
  • GetALife
    I think my name says it all...

    And by the way...

    "I spent quite a bit of time in 2006 fighting Pyramid’s plans to swap land that would have resulted in a relocated Mcdonald’s drive-thru on South Grand."

    ...maybe if you shoud consider supporting some development rather than constantly bashing it.
  • Craig
    Ouch.
  • john w.
    I'm beginning to wonder how hard the sub-prime mortgage and credit crisis will hit our city in terms of active projects and those proposed. Question marks all over the place. Not good.
  • john w.
    Regardless of opinions about the quality of their developments, you have to feel especially bad for not only the employees but also the company as local developer doing what it believes it can for this city. This is not good news by any measure, to be sure.
  • Onceadowntowner
    Steve -
    I think it is unfortunate that you are posting a rumor on your site, even one labeled as such. If this is true, I have a feeling that most of the employees do not even know of this yet. I realize that you are still stuck in the middle of nowhere and probably bored (& it looks like getting better each day :)), but I really thought more of you and your site than to post as of yet unsubstantiated rumors.
    [slp- my source is very reliable.  I placed a call to verify but it seemed nobody was around to answer the phone.]
  • StuckInDowntown
    I'm sure it doesn't help them with the fact that many of their buildings are situated near the park that is being destroyed which ultimately causes problems for those with dogs and guests of residents for parking issues. I haven't read up on what exactly is going on, but it is a mess near 9th and Market. Not a "selling point" for buying a condo or renting a loft at the Arcade or Paul Brown.
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