Billionaire developer Alan Casden, in the midst of a bitter partnership breakup, is on the verge of losing two key properties he’s tried to hold on to – possibly to rival local developers.
CIM Group Inc. of Hollywood is looking at acquiring the site of Casden’s high-profile West Hollywood Movietown Plaza project, which is entitled for 371 residential units and ground-floor retail. And Grove developer Rick Caruso could be a likely buyer of a Ross Dress for Less site across the street from the Fairfax District mall. Casden has proposed a 300-unit apartment complex at that location.
The properties have been put on the market by an affiliate of New York private-equity firm Cerberus Capital Management LP, the developer’s estranged partner in his Casden Properties LLC property development company.
Casden lost control over the properties’ fates after a dispute earlier this year with Cerberus, which subsequently replaced him as the managing member. That put the company in control of deciding what to do with the two properties and four others facing foreclosure as the financially troubled partnership winds down.
To avoid foreclosure sales that have been scheduled this month for several properties, Cerberus is scrambling to sell them even though Casden wants to keep the Movietown and the Ross sites. Sources said there is such bad blood between the partners that Cerberus would like to find any buyers except Casden.
One likely possibility for the Movietown site is CIM, which owns the Hollywood & Highland Center, a source said. But it wouldn’t be the only interested party. The city of West Hollywood has received at least five inquiries into the property in the last month, said David DeGrazia, a West Hollywood senior planner.
“We’ve had many calls from people interested in purchasing it,” DeGrazia said. “The last woman I talked to made it seem like the period they could submit bids was closing very soon.”
Caruso, meanwhile, has long expressed interest in buying the Ross property, and is a likely bidder now that it’s for sale, a source said.
Bill Bauman, executive vice president at the downtown L.A. office of Studley Inc., said the firm has listed the Ross property since Nov. 18, but declined to discuss potential buyers.
“We are actively marketing it to select groups,” Bauman said. “We’re expecting to have a fairly short offering process, and we are hopeful of selecting a group and doing a transaction sometime this year or early next year.”
A CIM spokesman confirmed that the developer has been looking at the Movietown property, but declined to comment further.
Caruso also declined to comment for this story.
The Business Journal in May estimated Casden had a net worth of $2.63 billion, placing him at No. 12 on the list of Wealthiest Angelenos.
But in September, Forbes magazine dropped his estimated net worth by $700 million to $1.2 billion, citing the partnership breakup and loan defaults.
Casden made most of his money building apartment complexes.
Losing the two properties would be a blow to Casden. Before the dispute, he had scheduled a September groundbreaking on his Movietown project, which experts said could be worth hundreds of millions of dollars upon completion.
His plans for the Ross property have gone through several iterations, but his most recent proposal called for 300 apartments, including 150 units for senior rental.
Casden declined to comment through a spokeswoman.
A Cerberus spokesman also declined to comment.
Casden and Cerberus owe lenders led by Comerica Bank more than $30 million on five properties. Sources said Cerberus is in discussion with the banks about an orderly commercial sale process, which may include an extension. In addition to the Movietown and Ross sites, Cerberus has listed for sale entitled properties in Simi Valley and Oxnard.
If Cerberus can’t work something out with the banks, the properties in Oxnard and Simi Valley, as well as one in Ventura, are scheduled for auction Dec. 16. Movietown and a 95-acre undeveloped property in Santa Clarita are scheduled for auction Dec. 21.
In addition, Comerica began foreclosure proceedings against the partnership’s sixth property, the Ross site, citing more than $12 million in unpaid loans, though an auction date is not yet set.
The estranged partners had grand plans when they teamed up in 2002. But during the credit crunch and recession that followed the financial crisis, they struggled to develop the properties. Only one project, the 350-unit Palazzo in Westwood, was completed in 2008.
Casden was able to keep the Palazzo, buying it away from the partnership with the help of a new money partner, the Canada Pension Plan Investment Board. But that same month, Cerberus affiliate Blackacre replaced Casden as managing member of the partnership by exercising a contract clause giving it that right.