Deutsche Bank and other lenders are compelling Hackman Capital Partners, one of the largest independent studio and soundstage owners, to divest entertainment properties around Los Angeles. This move comes as commercial real estate values in the area have significantly declined and demand for production facilities remains low. Hackman had acquired several prominent studio lots in recent years, but the current market downturn has led to financial distress.
A prime example is Television City, a historic 25-acre lot in central Los Angeles that Hackman bought in 2019 for $750 million. A group of lenders, led by Deutsche Bank, which holds a $350 million mortgage on the property, is actively seeking a real estate broker to market Television City for sale. The bank has also initiated foreclosure proceedings against Hackman Capital Partners for defaulting on over $357 million in debt related to this property.
Beyond Television City, Hackman Capital is facing broader financial challenges across its portfolio. Deutsche Bank is also pursuing action against Hackman's MBS Media Campus in Manhattan Beach, where the company defaulted on a $257.6 million loan. Earlier this year, Goldman Sachs took over the Radford Studio Center after a $1.1 billion debt default, with Netflix reportedly under contract to acquire it for approximately $400 million, further illustrating the widespread difficulties in the studio real estate market.
The industry's struggles are attributed to several factors, including high interest rates, production delays following recent strikes by writers and actors, and spending cuts by entertainment executives. These issues have undermined large real estate investments made during the peak of the streaming era. Hackman Capital Partners CEO Michael Hackman acknowledged the difficulties, stating that the company has "made mistakes on" a couple of deals and will "lose a lot of money on those properties."
Despite the current challenges, Hackman Capital CEO Michael Hackman remains optimistic about the long-term prospects of the business. He noted that the company still has significant "dry powder" for new deals and that a number of its 19 existing studios, including those in Vancouver and a recent deal in Ireland, are debt-free and performing well. He also highlighted the potential for these large land parcels to be redeveloped for residential, industrial, or alternative entertainment uses like large-scale live events, suggesting a broader outlook beyond traditional studio operations.
