More Munk-Key Business

After blogging about Barrick Gold Meister Peter Munk yesterday, today another Munk key business is in the news.

Brookfield, Blackstone to Buy Trizec for $8.9 Bln

une 5 (Bloomberg) -- Brookfield Properties Corp., owner of the World Financial Center in lower Manhattan, and buyout firm Blackstone Group LP agreed to acquire Trizec Properties Inc. for $8.9 billion including debt, the second-largest takeover of a real estate investment trust.

Trizec, whose chairman is Canadian real estate mogul Peter Munk, will almost triple Brookfield's U.S. properties, especially in New York, Washington and Los Angeles. Half of Brookfield's 48-million-square-foot portfolio is in Canada.

Even though Trizec's shares have outperformed most other office REITs in the past year, ``the company continues to be undervalued in the public markets,'' Tim Callahan, the Chicago- based company's chief executive officer, said today in a statement.

Office REITs Jump on Merger Speculation
NEW YORK — Shares of office real estate investment trusts rose in afternoon trading Monday after Brookfield Properties Corp. agreed to buy Trizec Properties Inc. at an 18 percent premium.

Munk is the man with the golden thumb. But not all that glitters is gold. Munks Trizec has major problems in its West Coast investments.

For Trizec, the deal marks the end of a turbulent and fascinating history that saw a company with a major stake in retail development transformed into a leading office market player. Two attempts at grand-scale retail development, in L.A. and Las Vegas, proved disastrous, and frequent course changes under Peter Munk's guidance in the late 1990s also marred the stock's performance.

Los Angeles the city of light and darkness, the contrasts of poverty and excess, of working class enclaves and big city development. As Marxist Urban Historian Mike Davis has documented in his books on Los Angeles.

"The ultimate world-historical significance---and oddity---of Los Angeles is that it has come to play the double role of utopia and dystopia for advanced capitalism," writes Davis, in City of Quartz: Excavating the Future in Los Angeles. "The same place, as Brecht noted, symbolized both heaven and hell. Correspondingly, it is the essential destination on the itinerary of any late 20th century intellectual, who must eventually come to take a peep and render some opinion on whether 'Los Angeles Brings It All Together' (official slogan), or is, rather, the nightmare at the terminus of American history (as depicted in noir)."

Trizec led that development which disposed of older working class communities in favour of large scale downtown buildings, with tax breaks and tax incentives from the generous ruling class of the city.

City of Quartz, Fortress LA

Eighty years later, the martial spirit of General Otis pervades the design of Los Angeles's new Downtown, whose skyscrapers march from Bunker Hill down the Figueroa corridor. Two billion dollars of public tax subsidies have enticed big banks and corporate headquarters back to a central city they almost abandoned in the 1960s. Into a waiting grid, cleared of tenement housing by the city's powerful and largely unaccountable redevelopment agency, local developers and offshore investors (increasingly Japanese) have planted a series of block-square complexes: Crocker Center, the Bonaventure Hotel and Shopping Mall, the World Trade Center, California Plaza, Arco Center, and so on. With an increasingly dense and self-contained circulation system linking these superblocks, the new financial district is best conceived as a single, self-referential hyperstructure, a Miesian skyscape of fantastic proportions.

Like similar megalomaniacal complexes tethered to fragmented and desolate downtowns--such as the Renaissance Center in Detroit and the Peachtree and Omni centers in Atlanta--Bunker Hill and the Figueroa corridor have provoked a storm of objections to their abuse of scale and composition, their denigration of street life, and their confiscation of the vital energy of the center, now sequestered within their subterranean concourses or privatized plazas. Sam Hall Kaplan, the former design critic of the Times, has vociferously denounced the antistreet bias of redevelopment; in his view, the superimposition of "hermetically sealed fortresses" and random "pieces of suburbia" onto Downtown has "killed the street" and "dammed the rivers of life."'

Yet Kaplan's vigorous defense of pedestrian democracy remains grounded in liberal complaints about "bland design" and "elitist planning practices." Like most architectural critics, he rails against the oversights of urban design without conceding a dimension of foresight, and even of deliberate repressive intent. For when Downtown's new "Gold Coast" is seen in relation to other social landscapes in the central city, the "fortress effect" emerges, not as an inadvertent failure of design, but as an explicit--and, in its own terms, successful socio-spatial strategy.

The goals of this strategy may be summarized as a double repression: to obliterate all connection with Downtown's past and to prevent any dynamic association with the non-Anglo urbanism of its future. Los Angeles is unusual among major urban centers in having preserved, however negligently, most of its Beaux Arts commercial core. Yet the city chose to transplant--at immense public cost--the entire corporate and financial district from around Broadway and Spring Street to Bunker Hill, a half-dozen blocks further west.

Once again Munk has benefited from State Capitalism, as with his Clairtone business in Nova Scotia which sucked millions from taxpayers before going belly up. In the case of Trizec from municipal state capitalism as they were inticed with tax give ways to invest in the redevelopment of downtown LA.

TRIZEK ANNOUNCES DOWNTOWN LOS ANGELES PROPERTY ACQUISITION

Trizec again reports poor Hollywood sale

In another indication of the continued struggles at the Hollywood & Highland complex, developer Trizec Properties Inc. has disclosed that operating income will be sharply lower than expected this year and that the adjoining Hollywood Renaissance Hotel had average occupancy during the first six months of 54 percent, far below break-even levels.

The dismal results, revealed as part of New York-based Trizec's earnings report, provide the most revealing glimpse to date on how badly the once-ballyhooed project has been performing. While much of the sluggish business can be tied to factors beyond the developer's control--in particular the post-Sept. 11 slowdown in Asian tourist business-the numbers are certain to renew questions on the project's long-term viability.

In Los Angeles Trizec benefited from insider real estate deals that Davis documents, and of course from Proposition 13 which boosted the real estate and development sectors bank accounts. That wealth went into the pockets of companies like Trizec which are tax free trusts.

City Beat Interview with Mike Davis

Remember, California had a lot of poor immigrants in the ’30s and, ’40s, but that generation went to good schools and got free higher education. The same level of opportunity is not being made available to this generation. Their future has been looted in advance by the selfish policies of Proposition 13. Who benefited most massively from it and the reason it was a fraud were commercial and industrial property owners. They got untold billions. This grew out of a very justified complaint in a period of rapid land inflation. Poor people and retired people were faced with punitive tax bills. But the solution was to simply destroy progressive property tax as a source of revenue. It had the most perverse effect – taking away funds from schools. It has led to newer home buyers paying sometimes 10 to15 times more taxes than their neighbors. It has allowed a lot of wealth to escape taxation.

The looting of LA which Davies links to the Rodney King riots today continues in the merger and acquisition orgy on Wall Street and the sale of Trizec Truist into private hands. More capital flows out of LA and into the world market.

Also check this interview this Davis.

Tomdispatch Interview: Mike Davis, Turning a Planet into a Slum

Tomdispatch Interview: Mike Davis, Green Zones and Slum Cities

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