In rare public comments, developer Rob Maguire asserted that he expects to have financing for the long-stalled Playa Vista development within 60 days and avert the foreclosure that now threatens the development.
Maguire also said he expects leasing activity for the first Playa Vista phase to take off once the financial issue is resolved and provided that a state Court of Appeals panel rules in Playa Vista’s favor on an environmental challenge to the development.
“We’re all frustrated by the amount of time it’s taking” to get construction going on Playa Vista’s first phase, Maguire said.
But he added that the existing Hughes aircraft hangar structures could be converted to media-oriented facilities and ready for occupancy within a year of a Playa Vista groundbreaking.
Maguire’s comments came in an interview with the Business Journal last week. He also appeared before a breakfast meeting of real estate executives in Century City, but avoided discussion of Playa Vista.
Even though his speech was billed as “New development challenges and opportunities (Playa Vista),” Maguire instead focused on detailing the extensive development record of Maguire Thomas Partners.
That record, however, is now being tarnished over what should have been Maguire’s crowning achievement the 1,087-acre development below the Westchester Bluffs.
The Chase Manhattan-led banking group holding $150 million in loans secured by the property initiated foreclosure action this month, saying it is owed $195 million in principal, interest and penalties.
The action came after Maguire failed to come up with financing for the development, which is supposed to have the DreamWorks SKG studio as its centerpiece.
A source close to Playa Vista said last week that Maguire has reopened discussions with an investment group headed by Beverly Hills financier Gary Winnick to infuse a much-needed $200 million in capital into Playa Vista in exchange for a majority stake in the development.
Winnick’s Pacific Capital Group has the support of DreamWorks, but its role in the deal was called into question this month after Winnick told the Business Journal he was assuming a bigger role in the project angering Maguire.
Maguire, Winnick and DreamWorks all declined comment on the status of negotiations last week which the source said was an encouraging sign.
“When everyone involved suddenly stops talking (publicly) altogether, that’s a pretty good sign that things are moving along,” said the source.
Maguire later issued a statement indicating that all parties to the negotiations have agreed not to make “any specific public comment until a resolution is reached.”
In the interview, Maguire also talked for the first time publicly about a dispute with his company’s longtime development partner, major corporate tenant and Playa Vista technology consultant and likely tenant, high-tech giant IBM Corp.
The dispute leaked out by way of a November 1996 letter from an IBM executive to Maguire.
The letter from IBM executive Richard Selvage aimed to collect $430,000 the Playa Vista landowners owe the technology giant for its technology consulting role at the big development project.
The letter also said IBM might pull out of its planned role in the Playa Vista development.
“That was my fault because I didn’t communicate clearly with Rick about Playa Vista,” Maguire said. “We value the relationship (with IBM) highly, and we’ve never had any disputes in 15 years,” he added.
Maguire said the arrangement with IBM allows for the accrued bill to be applied to equity in a new “technology partnership” that will provide services to Playa Vista and its tenants. He added that IBM within the last “30 to 40 days has confirmed that (the arrangement) is something they are willing to consider.”
Maguire also said IBM is still endeavoring to determine how much space it will take at the Playa Vista media-technology campus, “whether it’s 25,000 or 200,000 square feet.”
An IBM spokesman would only confirm that IBM still has a technology consulting contract with the Playa Vista developers.
Maguire said he continues to communicate regularly with other tenants expressing interest in Playa Vista as well.
But there’s clearly some frustration building among some of the high-profile high-tech firms that tentatively committed to the long-stalled seaside community 15 months ago.
While the likes of GTE Corp. and Silicon Graphics Inc. say they’re still planning to participate in Playa Vista’s focal media-technology campus, another major would-be tenant is predictably taking a wait-and-see posture.
“We think it’s incumbent on these other parties to get their act together, so we don’t have anything to say right now,” said Bob Hoffman, spokesman for Digital Domain, a fast-growing multimedia company that participated in the splashy December 1995 press conference announcing plans for the DreamWorks-anchored studio campus.