There’s some big financial rejiggering for the $3 billion Grand Avenue development. Istithmar World, a sovereign fund controlled by the royal family of Dubai is in and Calpers, California's huge government pension fund, is out. Actually, Calpers has been out for some time. The Downtown News has the scoop, with developer Related Cos. saying that the new financial arrangements will still allow the first phase of the project to be completed by 2011. With a new investment partner, Related must get new approvals. Once that happens, it can move forward with demolishing a multi-level parking lot on the project site, across from Walt Disney Concert Hall. After taking several months to finalize the numbers, the new agreement is "completely signed and committed," Related's Bill Witte told the paper. You might recall that Related delayed the groundbreaking ceremony in December for the third time, raising some questions about the project's viability. After all, this is a pretty crummy time to be looking for financing.

With Istithmar committed, Related's biggest financial hurdle - partnering to provide the more than $300 million in equity that the developer pays upfront to obtain its estimated $600 million-plus construction loan - is now cleared, Witte said. "In this climate, you can get a construction loan if you have enough equity," said Witte. "The bigger challenge is getting the equity, because you're taking the bigger risk."

*Backstory: Istithmar has become an increasingly visible investor, especially since so many other sources of capital are drying up. Euromoney magazine had an extensive profile last year.

Though Istithmar is government-owned, it has the same aim as any other private equity investor: to achieve above-average risk-adjusted returns. Where it does differ from the other traditional players is in its flexibility. Because Istithmar has one shareholder with deep pockets - the government of Dubai - it has few of the constraints of some of its private sector competitors. Unlike many typical private equity houses, for example, the funds can take a long-term view on an investment, which can be anything up to 10 years, so long as the asset continues to perform. There are no artificial deadlines imposed on the firm as to when returns should be made. Nor is the fund limited to investing in private equity structures. Istithmar can invest across multiple types of assets to maximize value.