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."
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