playa-developers/apr14/bb/29 inches/1stjc/mark2nd

BRAD BERTON

Staff Reporter

A half-dozen prominent real estate firms have begun preliminary talks to develop the DreamWorks SKG studio in Playa Vista, well-placed sources told the Business Journal last week, even though the ultimate ownership of the Playa Vista site remains in doubt.

All six firms are prepared to develop the studio campus, whether it is built on the Playa Vista site near Marina del Rey, or at another location, the sources said.

“The mostly informal discussions now under way should evolve into a more formal interview process within the next several weeks, and might even include seeking a ‘request for proposal’ program,” according to one source.

No timetable for choosing a developer has been set, the source added.

After remaining mostly idled for several years due to the local economic recession, developers seem ready to work on Southern California’s first major studio in more than a half-century.

“Clearly, the DreamWorks studio will be among the most prominent and highest-profile projects to be developed in the entire world let alone L.A. for the balance of this century,” said Colin Shepherd, a locally based senior vice president with Hines Interests L.P., one of the six firms vying for the DreamWorks assignment.

While DreamWorks declined to discuss the prospective studio development assignment, sources at the new entertainment powerhouse confirmed that preliminary discussions have taken place with Houston-based Hines and five other real estate firms.

Additionally, major investors negotiating to become principal equity partners in the 1,087-acre Playa Vista seaside community are also said to be considering two of those companies as candidates to handle substantial development responsibilities for the entire project, likewise on a fee-for-services basis.

One of the firms is publicly traded San Francisco development powerhouse Catellus Development Corp., headed by former Maguire Thomas senior partner Nelson Rising. The other is a new L.A.-based firm, CommonWealth Partners, headed by former Maguire Thomas senior partners Ned Fox and Rick Gilchrist and three other former partners of the Maguire firm.

Executives at both firms were unavailable for comment. Both, however, have historic ties to the planned community’s current principal owner, downtown L.A.-based commercial real estate development giant Maguire Thomas Partners.

In addition to Hines, Catellus and CommonWealth, the development firms who have had discussions with DreamWorks include Newport Beach-based Koll Real Estate Group, San Francisco’s Bechtel Corp. and Chicago’s LaSalle Partners.

“DreamWorks was founded by the leaders, the strongest people in the entertainment industry, and they deserve the best of the leaders in our industry to execute this project,” Hines’ Shepherd said.

With the long-delayed Playa Vista development timetable still clouded by ongoing negotiations over a major ownership/financing recapitalization and other issues, DreamWorks has set no specific schedule for selecting a developer, sources at the company emphasized.

Sources also noted that Maguire Thomas a contender to be Playa Vista’s developer given its decade-long pursuit of the project is in the running to handle Playa Vista development responsibilities, and perhaps the DreamWorks studio as well.

However, the firm headed by high-profile development figure Rob Maguire and now operating primarily as Maguire Partners doesn’t have a lock on the assignment, according to sources close to some of the new Playa Vista investors.

“Rob’s insistence on having his company get development fees has been part of the problem” in securing sufficient financial commitments to get Playa Vista’s first phase out of the ground, said one well-placed source.

“There’s no substance to that comment,” Maguire said. He acknowledged that other developers are working with DreamWorks on its campus project, but declined to discuss the overall Playa Vista development assignment other than to say his company “obviously” would handle development of the commercial portion of Playa Vista.

“Our focus is on getting the (recapitalization) deal closed; then we can discuss things further,” Maguire said.

The commercial portion of Playa Vista’s first phase includes the 100-acre media-technology campus slated to be anchored by the DreamWorks studio. Silicon Graphics, GTE and Digital Domain are among the firms saying they’re interested in locating facilities at the campus.

The new Playa Vista ownership team now being assembled could also end up assembling an in-house team, possibly including some of the many Maguire Thomas executives that have worked on Playa Vista for years, sources said. Or the works could be divvied up among an in-house group, Maguire Partners and/or one or more of the other candidate companies.

In any case, Maguire and his partners-to-be are expected to make such a decision within the next two months.

That’s because the banking group holding some $150 million in mortgage debt on the Playa Vista property initiated foreclosure in early March leaving the landowners another three months to cure the loan defaults before the banks could end up taking over the property.

The Maguire-led partnership that has owned the Playa Vista property since the late 1980s needs capital to retire the mortgage debt and launch construction of the project’s massive infrastructure such as roads, sewers and utility lines.

Maguire and an investment team headed by Beverly Hills financier Gary Winnick are now working to finalize previously announced plans for a recapitalized Playa Vista ownership/ development team expected to leave Maguire with a minority interest in the development.

Washington, DC-based Union Labor Life Insurance Co. has teamed up with Winnick’s Pacific Capital Group, and Century City-based real estate investment giant Colony Capital Inc. is also expected to become a major player in the new Playa Vista ownership group.

DreamWorks, which had previously announced it would become a partner in the entire Playa Vista project, will likely put together a separate entity that will own and develop the new entertainment company’s studio campus slated to be the centerpiece of a 100-acre media-technology park.

Spokesmen for Colony and Pacific Capital declined to comment.