Default Notice Filed on Loan for Playa Vista
Chase Manhattan Bank has taken the first step toward foreclosing on the massive Playa Vista real estate project, putting embattled developer Robert Maguire under greater pressure to reach a financing deal and start long-delayed construction, people familiar with the development said Tuesday.
The New York bank filed with the Los Angeles County’s Recorders office a notice of default on a $150-million loan on the Playa Vista site, which is south of Marina del Rey. The filing of the notice late Monday would allow Chase Manhattan to sell the property in 120 days if an agreement is not reached with Maguire, according to legal and real estate experts. The loan is more than a year overdue.
Chase Manhattan is saying, “Hey, let’s make it happen. We are tired of this,” said Los Angeles real estate attorney Gerben Hoeksma.
Maguire--who has been embroiled in a feud with potential partners and Playa Vista’s flagship tenant, DreamWorks SKG--was not available for an interview. However, his Los Angeles-based company issued a statement that said, “Despite their filing, we think Chase will continue to support our efforts to reach an initial agreement on financing, and we believe that will happen relatively quickly.”
Chase Manhattan executives could not be reached for comment.
DreamWorks executives were also not available for comment, but according to people familiar with the studio’s executives, Chase Manhattan’s filing will not push DreamWorks, which plans to build its headquarters and main studio at Playa Vista, into abandoning the project. In fact, DreamWorks executives are said to have welcomed the bank’s action as a way of forcing Maguire to negotiate with potential investors.
Negotiations with the most recently acknowledged potential investor, a group represented by Beverly Hills financier Gary Winnick, apparently fell apart in the last week. The Winnick group, which is backed by union pension funds interested in supplying Maguire with the money to pay off the Chase Manhattan loan and start construction, has received public support from DreamWorks executives.
But Maguire may be able to buy more time to pursue other investors, real estate and legal observers said. The developer could throw the project into Bankruptcy Court to delay Chase Manhattan from selling off Playa Vista, they said. A bankruptcy filing would then further push back start-up of the approximately 1,000-acre project, on which construction was scheduled to begin last summer.
The notice of default is the latest public flare-up involving the high-profile project, which, if completed, would rank as one of the largest, private real-estate developments in the country.
DreamWorks has threatened to locate its main studio elsewhere in response to delays in starting construction in Playa Vista. IBM, which has invested and occupied space in many previous Maguire Thomas projects, has already abandoned plans to participate in the project and had demanded more than $400,000 in development fees from Maguire.
Some Los Angeles city officials also have threatened to withdraw their support for the generous tax breaks for Playa Vista if DreamWorks drops out of the project. The city has pledged more than $70 million in tax credits to Playa Vista, which is expected to create thousands of high-paying jobs and bolster Southern California’s leadership in the burgeoning and lucrative multimedia industry.
