Investors from Japan have agreed to buy the Riviera Country Club, a landmark Los Angeles resort that opened during Hollywood's golden era, for $108 million, it was disclosed Tuesday.
Laaco Ltd., the partnership that owns the venerable golf and tennis club, announced that it will sell the club to an unidentified Japanese real estate company. The buyer will not be identified until the deal is closed, Laaco said. A Laaco spokesman said the motivation to sell was purely financial, noting that "the price was too good to turn down." The buyer intends to continue operating the choice Pacific Palisades site as a golf and tennis club, Laaco said.
The Riviera Country Club dates to the 1920s and was a favorite haunt of silent film stars Douglas Fairbanks and Mary Pickford. Errol Flynn was once arrested there after stealing the badge of an off-duty policeman during a lavish dinner.
Its proposed sale is a graphic illustration of how wealthy Japanese investors--many of them ardent golf enthusiasts--are broadening their real estate investments in the United States to resort properties in states such as California and Hawaii. Residential properties have emerged as another favorite.
Big Japanese investors had, until recently, bought mainly blue-chip downtown office buildings in cities such as Los Angeles, Honolulu and New York. The Arco Plaza, for example, is one of the many structures in downtown Los Angeles owned by Japanese investors.
But Japanese buyers, newly enriched by the rising value of the yen, are now acquiring golf courses all along the West Coast and on the island of Oahu in Hawaii. A Japanese firm from Osaka, Sports Shinko, acquired the famed La Costa Resort Hotel & Spa in San Diego County last fall for $250 million.
Big Golf Fans
"Golf courses are on their agenda," said Jack Barthell, a managing partner with the Los Angeles consulting firm of Kenneth Leventhal & Co. "They have a very keen interest in golf courses. I would expect this trend to continue."
The Riviera is a natural because it is well known in Japan as a setting for the annual Los Angeles Open Golf Tournament, said Yukuo Takenaka, a consultant for the accounting and consulting firm of Peat Marwick Main in Los Angeles. "The Japanese have a tremendous affection for golf," he added.
In a recent study, the Kenneth Leventhal company said Japanese investors spent $12.8 billion on U.S. real estate in 1987. They now own $2.4 billion of U.S. residential property and $3 billion in miscellaneous parcels such as golf courses and industrial properties, the firm said.
The proposed Riviera sale takes in a 160-acre piece of land that includes the golf course and adjacent tennis club. Together, the clubs have more than 1,500 members, said Frank Hathaway, who heads Laaco, an investment partnership that also owns the Los Angeles Athletic Club and the California Yacht Club.
The idea for the Riviera Country Club dates back to 1918 when members of the Los Angeles Athletic Club--including Hathaway's grandfather--first discussed a country club for servicemen returning from World War I.
Opened 61 Years Ago
Opened in 1927, the golf course took 18 months to build and cost $243,827, a princely sum in those days. The first foursome that teed off on June 24, 1927, included California state champion Willie Hunter, who shot a two-over-par 73.
The new buyer has pledged to keep the Riviera a private club and maintain the present membership, Hathaway said. Laaco stands to reap a pretax gain of $104 million on the sale, most of which will be distributed to its several hundred limited partners, the firm said. The sale should take two to three months to close, a source close to the deal said.
Real estate experts in Los Angeles said it was difficult to speculate about the buyer's identity. "There are so many Japanese looking for golf courses on the mainland," Barthell noted.
Though the sale of such a prominent Los Angeles landmark undoubtedly will raise eyebrows, Barthell said he does not think the sale will generate anger or controversy. In Hawaii, Japanese investors have angered local residents with their plans to turn farmland into golf courses.
"Will people sit up and take notice of this?" Barthell said. "Yes, definitely. Will there be a backlash? Probably not."