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LA Live! Hotel Equity Partner Backs Out; Newspapers Make a Fuss

By Eric Richardson
Published: Wednesday, November 23, 2005, at 06:43PM

The Downtown News today reports what's been in various stories over the past few days, that Apollo Real Estate pulled out of the LA Live! hotel deal.

Apollo Real Estate Advisors, which had agreed to finance the Hilton-operated hotel to the tune of $60 million, has backed out of the arrangement over escalating construction costs, according to sources close to the deal. The hotel's price tag, originally pegged at about $350 million, is now estimated at well over $500 million.

In reality, this isn't a big deal. It says a lot to me that AEG is staying firm with the design they want and that they're willing to find another equity partner who will come along with them. Downtown is hot right now. In the scheme of things, $70mm isn't a lot of money, and I don't see any trouble finding another partner. But of course right now everyone gets to play it as "Plans falling apart! Money wasted!" Whatever. Michael Collins takes the right stance in the story.

"Who the partners will be I don't know. I think though that most of the people we are looking at now will be there at the table at the end of the day. While it looks uncertain now it will sort itself out."


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