May 11 (Bloomberg) -- A package of Los Angeles real estate on sale for 35 cents on the dollar is attracting investors to the depressed shares of Meruelo Maddux Properties Inc., the biggest private landowner in the city's four-square-mile downtown.
The stock has plummeted 85 percent since an initial public offering 15 months ago as the global credit crisis threatens to disrupt refinancing of $200 million in mortgage debt coming due in the next 12 months, as well as completion of the city's tallest downtown residential tower.
Meruelo Maddux owns or controls 80 acres including the Little Tokyo Shopping Center, home of the country's largest Japanese supermarket, as well as warehouses and buildings used in Tom Cruise's action film ``Mission Impossible III.''
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Meruelo Maddux's market capitalization of $142 million is about a third of the book value of its properties minus debts. Loan payments and maintenance consume $500,000 a month more than the company takes in, eroding the developer's $13.5 million in cash.
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Meruelo Maddux's biggest bet is that people will want to live downtown, where 500,000 work but only 35,000 dwell....Meruelo Maddux is building a 34-story rental tower, known as 717 Ninth, that will be Los Angeles's tallest downtown residential structure. Twenty floors have been erected so far. The building is across the street from a 50,000-square-foot Ralphs Grocery Co. outlet, the first supermarket-chain store to open downtown in more than 50 years.
Bank Balks
While a ``large bank'' pulled out of a $97 million construction loan for the tower in January, the project will be completed on time next year, Meruelo told analysts on a March 31 conference call, without identifying the lender. The company is negotiating a new loan, he said.
People do want to live downtown. What they don't want to do is pay $700K to do it. Wonder what the sales prices will be when the tower is finished next year?
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