Culver City could become the new owner of the 198,000-square-foot vacant former Sony Pictures Animation campus at 9050 Washington Blvd.
The Culver City City Council and Public Finance Authority voted unanimously Sept. 28 to ink a $103 million purchase option agreement with lender Fortress Investment Group for the 3.5-acre complex.
The proposed sale price works out to about $520 per square foot, roughly equal to the unpaid debt former landlord Hackman Capital Partners racked up at the property before Fortress took back the keys with a $71.3 million credit-bid at a foreclosure auction in August, as the Business Journal previously reported.
The agreement gives the local finance authority until Feb. 28, 2027 to decide if it wants to buy the vacant three-building, Art Deco-style campus – and draw up a plan for what to do with it. The city will spend up to $500,000 on an appraisal, environmental and structural reviews, traffic studies and other due diligence, according to council’s resolution.
“Tonight’s vote does not approve a $103 million purchase or any construction project,” Assistant City Manager Adam Troy told the council. He added that the funds would come from the finance authority’s budget, not the city’s general fund. The agency proposes financing the acquisition through a conduit or revenue bond financing structure.
Studio boom to bust
Studio developer Hackman and partner Affinius Capital, then known as Square Mile Capital Management, bought the three-building campus across from Hackman’s Culver Steps in January 2021 for $165 million and received a $100 million loan from Goldman Sachs, property records show.
“The investment fundamentals have never been stronger,” Square Mile co-founder Craig Solomon declared at the time.
But Sony Pictures Animation decamped for mid-Wilshire in 2024, leaving the property vacant for more than two years. A CBRE lease offering currently lists the entire complex as available.
By that time, Fortress was already involved. The New York-based investment firm purchased the note for the property’s debt from Goldman Sachs in 2023, property records show.
And things finally came to a head this year. Hackman defaulted on its debt in April, and Fortress foreclosed, citing $103.5 million in unpaid debt. The lender ultimately took back the property with a $71.3 million credit-bid at foreclosure auction four months later, according to a trustee’s deed filed after the sale.
A spokesperson for Fortress said the bid was based on the cost of holding the debt for three years and going through expensive foreclosure proceedings. He said it was not a valuation of the property.
“Anyone could have come along and bid higher than that. We prevailed,” the spokesperson said.
In his presentation to the Culver City Council, City Manager Odis Jones also disputed whether Fortress’s $71.3 million bid represents a valuation, since no transfer tax is collected when a property sells for less than the value of its unpaid debt at a non-judicial foreclosure auction in California.
But Jones added that city officials are negotiating with Fortress on the price.
“The entity that we’re dealing with is the bank of the project, not someone who acquired this property for the purposes of flipping it to the city,” Jones said.
Teardown planned
If Culver City buys the campus, it would demolish the existing buildings and construct something new, Jones told the City Council before the vote last month.
City staff presented several concepts they’re considering for the site, including affordable and workforce housing, space for youth, senior programs and a hotel. One business plan involving weekly events and some 14,600 annual hotel guests would generate about $19.6 million in economic activity and $477,000 in hotel tax revenue per year, according to the staff report. Troy called those figures “estimates,” not projections.
If the city moved ahead with a housing development on the site, Jones said 25% of units would be set aside for low-income households earning 80% of the area median and the rest for those earning 120%, or moderate income. A housing project would also require rezoning since the parcel is currently zoned for studio use. The environmental review process would take at least a year, Jones told the council.
About a dozen public commenters criticized the closed-door meetings leading up to the Sept. 28 vote. City officials negotiated with Hackman and its lenders in a June 22 closed session and councilmembers discussed the deal further in closed session Sept. 14, according to the council’s agendas.
The post Culver City in Talks to Buy Former Sony Site appeared first on Los Angeles Business Journal.
