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Sunday, May 22, 2022

Document Prompts Talk of Sunset Millennium Sale

Document Prompts Talk of Sunset Millennium Sale

By DANNY KING

Staff Reporter

The circulation of an “investment summary” document assessing the cash flow and value of Maefield Development’s Sunset Millennium project in West Hollywood has fueled speculation in real estate circles that at least a share of the project could be for sale.

The package, prepared by CB Richard Ellis, valued the 770,000 square foot mixed-use project at $470 million and based its projections on the inclusion of 446 residential units, rather than the 370-room hotel entitled by the city.

Mark Siffin, president of Maefield, dismissed the notion that a portion of the project was on the market, saying that the assessment was commissioned as part of an exploration of alternative development scenarios in response to the effects of the Sept. 11 attacks on the project’s potential value.

“The analysis was done for an understanding of what an alternative development of the site would cost, (and what it would) bring in, and it’s my obligation to look at all alternatives on a constant basis,” said Siffin. “No percent of the deal is for sale.”

But a combination of the Sept. 11 aftershocks and the circulation of the document have led to suspicions that Maefield’s investment partner, Apollo Real Estate Advisors, might want out of the deal.

West Hollywood City Councilman Steve Martin acknowledged the challenges Maefield may be facing from its financial partner over concerns about a weakness in the hotel market.

“They’re dealing with investors that are very shortsighted,” said Martin. “By the time the hotels are constructed, the market will have completely bounced back.”

Officials at both Apollo’s Los Angeles and New York offices declined comment.

The document says entitlements for residential use are expected to be granted in the first quarter of 2002, even though Maefield has made no application to the city, which is not enthusiastic about the prospect of losing transient occupancy taxes generated by a hotel.

“They’ve got a tough sell before the council,” said Martin, who added that even if entitlements were to be considered, the timing stated in the document is unrealistic.

The document says that total construction cost of the three-phase project is $273 million and that in its fourth year after completion it would generate cash flow of $42 million.

Among the big revenue generators are signage fees. The developer has deals in place that will bring in $35 million starting this week, and is projecting an additional $44 million in revenues from signs in the coming years.

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