A consortium of lenders led by Chase Manhattan Bank has filed a notice of default on the proposed Playa Vista project, the first step toward foreclosing on the massive development that is to house DreamWorks.
The notice of default has been long rumored, but it puts extra heat on Robert Maguire and Maguire Thomas Partners, the lead developer for the project.
With the filing, the Chase-led consortium, which also includes lenders Bank of America and Sanwa Bank, could foreclose on the project or initiate a bank sale after 110 days. The loans involved total about $150 million plus in-terest, according to sources.
But Maguire, in a statement, insisted that efforts were still afoot to find financing.
“Despite their filing, we think that Chase will continue to support our efforts to reach an initial agreement on financing, and we believe that will happen quickly,” he said Tuesday.
The notice is the latest problem to beset the long delayed project. Last week, press reports surfaced that Maguire was talking to two other investment banks, just one month after the developer announced that he had reached an agreement in principle to enter into exclusive negotiations with an investment group led by financier Gary Win-nick and Pacific Capital Group. Maguire has had no comment on those reports.
The Winnick group — which also included the Union Labor Life Insurance Co. and the J.E. Robert Co. — had been favored for some time by DreamWorks as a potential new partner to get the project off the ground. In all, they would have put $200 million into the project, and would have paid off the loans at the rate of 65 cents on the dol-lar. The new investment group would have had a majority stake in the project, to be overseen by a board of direc-tors.
Yet Maguire never signed an agreement in principle with Winnick to enter into exclusive negotiations. Even if Maguire had come to terms with Winnick, they were looking at breaking ground on the massive housing, office and studio development only toward the end of the year.
Even with the notice of default, and the specter of the project’s being mired in foreclosure or even bankruptcy, city officials Tuesday said they didn’t consider the setback a death knell for the development. Nor do they believe that DreamWorks is now definitely headed elsewhere. In fact, some officials suggested, it could even be good news for the project, as it sets a time frame for something to happen.
“It basically means that the heat is turned up a notch,” said Adi Liberman, chief of staff for councilwoman Ruth Galanter, whose district covers the Playa Vista project. “It is basically the banks saying ‘We need a deal.’ ”
“We are anxious to see this resolved,” DreamWorks exec Andy Spahn said Tuesday. “Right now, it’s between the banks and Maguire. Playa remains our first choice as a location, so we’re hopeful this will be resolved quickly.”
Maguire and his former partner, Jim Thomas, acquired a major stake in the project from the Howard Hughes Corp. in 1989. But they suffered through hard times when the value of the real estate market went south in the early 1990s.
When DreamWorks entered the picture in 1995, announcing that it would build a studio on the site, the project seemed to gain a new life.
But projected groundbreakings in summer and then fall of 1996 came and went. Late last year, DreamWorks began to air its frustrations with Maguire publicly, grousing that he was stalling the project because of his insistence on control and desire to find additional lenders.
Maguire, however, insisted that he was making progress in lining up financing, and that the delays were caused not only by the complexity of the project but by lawsuits filed by environmentalists opposed to the development.
The project, if built, would be an $8 billion dollar pinnacle for Maguire’s career, and one of the largest develop-ments to go forward in California this decade.
If the project is forced into a bank sale, however, there is still the chance that it could in turn be sold to the Winnick-led group.