Lumber Yard Ground Lease Is Listed

• City Council Will Have Final Say on Potential Sale

BY BILL KOENEKER 

The Malibu Lumber Yard shopping center’s ground lease is for sale. At the same time, the current owners want to change some of the terms of their construction loan and have been quietly talking matters over with city officials in closed session.

City Manager Jim Thorsen said the action the council is poised to take next week is in no way related to the proposed sale.

Thorsen said any buyer and their financing would have to be approved by the city council, which would have final say over who that buyer might be.

He said the city had not set any price tag, but did confirm the council also has final say over what price could be asked. Thorsen declined to discuss any further details of the proposed sale.

The current ground lease runs for 39 years with options for three five-year extensions. It requires Malibu Lumber LLC to pay a little less than $1 million per year, with an escalation clause to the city.

There are other provisions for additional rents once Malibu Lumber LLC has collected a certain amount over a threshold.

The rent payments are used to pay down the debt incurred by the city when it acquired the lumber yard, other buildings and the Chili Cook-Off site.

Some aspects of the Malibu Lumber Yard shopping center finances have come to light since the city council is being asked next week to delete the so-called bailout clause, or amendment No. 1, offered to Richard Weintraub and Richard Sperber, now that their company, Malibu Lumber LLC, wants to secure an extension of the maturity date of its $20 million construction loan, according to city officials.

“As a condition, Wells Fargo Bank is requiring that Malibu Lumber LLC agrees to waive or forego any deferral of rents it might otherwise have the right to receive under amendment No. 1 to the ground lease so long as the Wells Fargo Bank loan remains outstanding,” wrote Reva Feldman, the assistant city manager and administrative services director for Malibu.

The city’s ground lease contains language that requires Malibu Lumber LLC to seek approval for any of its financial arrangements, according to Feldman, who indicated while Malibu Lumber LLC is requesting approval, Wells Fargo is requiring the city approve the proposed modifications.

Feldman, in her memo to council members, acknowledged the change of terms by Malibu Lumber LLC “will have improved financial flexibility due to the extension of the existing construction loan.”

The 30,000 square foot shopping center is owned by the City of Malibu which offered Malibu Lumber LLC a nearly four-decade long lease in exchange for Weintraub and Sperber making all of the improvements and modifications to the former hardware store.