The largest office development site at Playa Vista is in flux.

The mortgage note on the 60-acre property, owned by a joint venture of Tishman Speyer Properties LP and Walton Street Capital LLC, has been put up for sale, the Business Journal has learned.

The sale calls into question the fate of the site where Hughes Aircraft Co. built the Spruce Goose. The development is entitled for nearly 2 million square feet of office and commercial space, and was expected to be built out over several years.

According to sources with knowledge of the situation, the mortgage has a balance of more than $150 million and is held by a consortium of lenders led by KeyBank of Cleveland. The note is expected to fetch roughly $50 million; a sale for that amount could represent a write-down of at least two-thirds.

A payment of about $150 million was due on the mortgage this summer, but New York-based Tishman Speyer and Chicago-based Walton opted to not pay it. They bought the property in February 2007, near the height of the market, and commercial real estate values have since crashed. Rather than foreclose and take over the property, the lenders decided to sell the note, according to a source.

Steve Soboroff, chairman and chief executive of Playa Capital Co. LLC, which developed the Playa Vista community and sold the entitled land to Tishman Speyer and Walton, said he believes the note sale is a positive development.

“If this process ends with a user or buyer – for all or a portion of the property – that is great news,” he said. “From our perspective the sooner those buildings are built and occupied, the better it is.”

Tishman Speyer, Walton and KeyBank all declined to comment.

Tishman Speyer and Walton have already begun construction of a multibuilding office development on the property. A source said they will retain ownership of the buildings, which have signed tenants Belkin International Inc. and USC.

Tishman Speyer and Walton’s original plans called for a total of about 1.6 million square feet of space delivered by 2012. Likely buyers of the note could be another development group or real estate investors. A CB Richard Ellis Group broker is said to have the note listing, but he would not comment.

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