Vestar

The decision by Lockheed Martin Co. to choose a new developer for a 103-acre retail-office project in Burbank means Phoenix-based Vester Development Co. is out a whole lot of money and time. Rick Kuhle, Vestar’s senior vice president who oversaw the project, was unavailable for comment, but sources estimate that Vestar spent as much as $3 million pursing the development. Vestar canceled its contract with Lockheed on Dec. 23 after several delays in the planning process. Escrow was scheduled to close Dec. 31, but the company decided it couldn’t risk closing the deal until all the entitlements were in place. Kuhle had said the project hit its biggest snag when Burbank officials decided they wanted the office portion of the project downsized from more than 1 million to about 600,000 square feet. That decision, reached when the local office market cooled, resulted in a delay in completing an environmental impact report. That, in turn, made it impossible to get all the entitlements in place by the close of escrow. Kilroy Realty Inc., which had agreed to develop the office portion of Vestar’s project, sued Vestar in L.A. County Superior Court on Dec. 4 after the office portion of the project got downsized. Kilroy alleged that Vestar had breached its contract with Kilroy by not getting city approval for 30 acres of office development, as planned. Tyler Rose, Kilroy’s treasurer, confirmed that Vestar has since settled the lawsuit with Kilroy, but did not disclose the details of the settlement. Christopher Woodard