After two potential buyers fell out of escrow on the MTV Building, owner M. David Paul & Associates LLP likely will hold on to the Santa Monica asset.
M. David Paul Vice President Jeff Worthe said last week that the inability to close a deal with any one of several serious parties and sinking interest rates are changing the building’s value to the company.
“I don’t think we’re going to sell the building,” Worthe said. “We generally aren’t sellers and to replace that building’s going to be a lot of work.”
Back in February, real estate industry insiders believed that the real estate arm of New York-based investment bank Lazard Freres & Co., which had fallen out of escrow on J.H. Snyder Co.’s Water Garden II late last year, had aced out Douglas, Emmet & Co. in bidding for the MTV building.
Lazard Freres declined comment at the time and Worthe said last week that the building never was under contract. At the time, sources said Lazard Freres was in escrow to buy the 306,000-square-foot MTV building for about $113 million, or $370 per square foot. Within the last month, a source said, another suitor TMW Real Estate Group LLC, an Atlanta company that advises German clients on real estate issues also fell out of escrow.
Because of its roster of creditworthy tenants locked into 10-year leases, the MTV Building is considered a very low-risk proposition. Worthe said that M. David Paul, which paid Tenet Healthcare Corp. an estimated $30.6 million for the building in 1996, has not given up completely the notion of selling, but the company is more likely to modify the mortgage on the building.
The two-wing, five-story building at 2600-2700 Colorado Ave. is called the MTV Building because the music video channel is its main tenant. Other tenants include the J. Paul Getty Trust, Microsoft Corp., EMI Group and Artisan Entertainment. The building is 100 percent leased, Worthe said.
The decision to pull the property off the auction block comes at a time when the softening real estate market, and particularly the sublease-glutted Westside, is causing skittishness on the part of buyers, according to Bob Safai, a principal at Westside real estate services firm Madison Partners.
“There’s a disconnect in the market,” Safai said. “Some sellers are thinking it’s a blip. Frankly, I think it is a blip.”
That “blip” is not discouraging Safai in his efforts to sell Olympic Plaza at 12233 W. Olympic Blvd.
Safai said he is marketing the property to 87 potential buyers. The five-building complex, which was developed in the mid-1980s and is leased mostly to entertainment companies, is full of short-term leases at rents that are 25 percent to 30 percent below market rates.
Safai said the five-building project, made up of three-story buildings connected by walkways in a campus-like setting, should sell for about $35 million.
The marketing of the three-acre Olympic Plaza property is timely because an 11-acre parcel abutting property at Olympic and Bundy Drive also is on the market. Both properties are considered redevelopment opportunities.
Safai said the ultimate buyer of Olympic Plaza could spend as much as $7 million to rehabilitate the five buildings and, obviously, if the adjacent 11-acre site were purchased as well, the two properties could be united into an integrated campus.
Booked to Expand
The demise of Hollywood Book City may have been assumed a bit prematurely.
Store manager Mitch Siegel, whose family owns the store, said not only will he be opening a new 1,600-square-foot store in TrizecHahn Corp.’s Hollywood & Highland project, but he will have another 2,000 square feet in the Galaxy Theatre project at Hollywood Boulevard and Sycamore Avenue. And, perhaps more significantly, Siegel’s not so sure he’ll be leaving the 6627 Hollywood Blvd. location that has housed the shop since it opened in 1973.
With developer CIM Group LLC planning to raze most of the Hollywood Boulevard block between Cherokee Avenue and Schrader Boulevard, Siegel said he thought it was curtains for Hollywood Book City.
“It looked like it was a worthless cause for awhile,” he said. “After the first of the year, the whole thing turned around.”
Discussions with TrizecHahn representatives fired up Siegel, who said he’s delighted to pay $12,000 a month to occupy a small slice of the 425,000 square feet of retail space planned for that project. At $7.50 per foot per month, the rent being charged by TrizecHahn is in another universe from the 45 cents per foot that Siegel and his family are paying on their 30-year-old lease now running on a month-to-month basis for the 10,000 square feet at 6627 Hollywood Blvd.
Siegel holds out hope that CIM, which reportedly has struggled to obtain entitlements for its redevelopment of the site where Book City sits, might never kick him out.
“Maybe, by some stroke of luck, I’ll end up staying,” he said.
Don’t count on it. Kuba said he hopes to have city approvals in place and to begin demolition by the end of summer.
CIM has enlisted art-house exhibitor Laemmle Theatres, one of the few movie chains to avoid bankruptcy in the last 18 months, to anchor the development. A Laemmle official said the family-owned theater company still plans to be a part of the project whenever CIM is ready to go.
Staff reporter Christopher Keough can be reached at (323) 549-5225 ext. 235 or at [email protected].
