New Twist Added to Long-Running Playa Vista Saga
Financier and supermarket mogul Ron Burkle has expressed interest in becoming a partner in the troubled Playa Vista real estate project where DreamWorks SKG wants to build a studio, according to people close to the project.
Burkle’s interest is the latest twist in the saga of the much-hyped, $8-billion mixed-use project that each day teeters closer to unraveling altogether.
Embattled real estate developer Robert Maguire has been trying to keep lenders at bay to work out a financing plan favorable to him while the clock ticks on foreclosure proceedings on the property that began in March.
A notice of sale, the next step in those proceedings, could be filed any day by investment banks Morgan Stanley Group and Goldman Sachs & Co. Those firms late Thursday were said to be pressuring Maguire to come to terms with a financing plan that was in place earlier this year, but fell apart.
If foreclosure takes place, a sale of the property could come as early as July, although Maguire could put off a sale by putting the partnerships controlling the land near Marina del Rey into bankruptcy proceedings. That could delay the project indefinitely and probably cause the fledging DreamWorks to pull the plug on its plans and look elsewhere for a home.
The two investment banks bought at a steep discount the majority of the bank debt on the property from Chase Manhattan Bank, which filed a notice of default in March on a $150-million loan after payments were more than a year overdue.
An executive close to Burkle downplayed his interest, and Burkle, through a spokesman, declined comment. Maguire could not be reached for comment.
But in a letter sent last week to Maguire, Burkle said “we are ready to be a good partner.” In his letter, he said that Maguire could develop Playa Vista--except for the DreamWorks part--and collect developer fees. Burkle said he would require a 15% return off the top before splitting any profits with Maguire.
Burkle made it clear in the letter--the contents of which were revealed to The Times by people close to the deal--that he would want to be an equity partner on the project, not a lender.
He added that “we are not a stalking horse.” That remark, according to people involved, apparently refers to complaints by various parties involved in Playa Vista that Maguire has attempted to play them off each other in trying to negotiate a deal.
Burkle is managing partner of the investment group Yucaipa Cos., which controls Ralphs Grocery Co. and Food 4 Less Inc.
He is well connected both politically and with major Hollywood figures, including the three DreamWorks partners Jeffrey Katzenberg, David Geffen and director Steven Spielberg. A major Democratic contributor, Burkle in the past has teamed with the three moguls to host star-studded political fund-raising events for President Clinton at his Los Angeles estate.
Burkle in the letter says that he considers Playa Vista a good financial investment but also a good community investment that would create “high-quality union jobs and a world-class project.”
DreamWorks, which is embroiled in a nasty feud with Maguire, would have its own developer, Burkle proposes. He says that he is “committed to” working with Katzenberg and Geffen.
The 1,087-acre project in February seemed to have cleared a major hurdle when Maguire appeared to have an agreement with Los Angeles financier Gary Winnick, pension fund manager Union Labor Life Insurance Co. and real estate firm J.E. Robert Cos. But that agreement unraveled.
