VALENCIA CENTER SALE OFF BANKRUPTCY ENDS DEAL.

Byline: Patricia Farrell Aidem Staff Writer

VALENCIA - The Newhall Land and Farming Co. said Monday that the anticipated sale of its Valencia Town Center crumbled over the weekend following the announcement that Edwards Theatres, with two multiscreen cinemas anchoring the regional mall, filed for bankruptcy.

``Unfortunately, it's an issue of timing,'' Newhall Land spokeswoman Marlee Lauffer said. ``But we understand that any potential buyer has to understand what impact, if any, the Edwards restructuring will have.''

The two Edwards theaters at Town Center - the year-old Edwards Palace with 11 screens plus a 3D Imax and the newly refurbished 10-screen Edwards Cinema - account for about 16 percent of the rent revenue for the center, Lauffer said.

Chicago-based RREEF, one of the nation's largest real estate investment firms, planned to buy the mall and much of the adjoining retail center along Town Center Drive.

Newhall Land had expected the sale to close by the end of September.

But RREEF, with $12.4 billion in assets, called off the deal even though Edwards has vowed to continue operating its three Santa Clarita properties, including the two at the Town Center.

RREEF project managers involved in the negotiations did not return telephone calls seeking comment.

The unraveling of a deal that one analyst estimated as worth $150 million will prove a setback in Newhall Land's priority effort to sell off properties to finance a stock buyback.

``It does disrupt their schedule,'' said Katherine E. Flores, a real estate analyst with Sutro and Co., a brokerage and investment banking firm. ``They had actually planned on financing the buyback on sales of their assets.''

Convinced its stock is undervalued, the Valencia-based Newhall Land has been repurchasing large blocks as an investment. The buyback is a priority and has been accomplished through the sales of other key developments, including the Valencia Marketplace two years ago for $111 million.

Edwards Theatres Circuit Inc. filed Wednesday for Chapter 11 bankruptcy protection, which calls for reorganization. The chain plans to close four of its older sites as part of a plan to restructure its debts.

In a prepared statement, Newhall Land Chairman and CEO Tom Lee said the company is confident that the Town Center Edwards operations are sound.

Flores predicted Newhall Land would hold off on a sale of the Town Center if the only other option is to discount the price while the Edwards situation plays out.

``They're not in a position where they need the cash,'' she said. ``They're sitting on a valuable asset and they can afford to wait this out.''

Lauffer said Newhall Land will continue to talk with RREEF and other potential buyers, but wouldn't offer specifics.

The mall is anchored by Robinsons-May, Sears and J.C. Penney, with build-out plans for two more major department stores.

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(ran in SAC edition only) The Edwards Theatres chain, which operates the Palace in Valencia Town Center, has filed for bankruptcy reorganization. The filing has ended a planned deal to purchase the center.

Gene Blevins/Special to the Daily News