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Group Close to Deal on Pebble Beach Course

May 27, 1999|MIKE PENNER | TIMES STAFF WRITER

A group of investors led by former baseball commissioner Peter Ueberroth, golf great Arnold Palmer and actor Clint Eastwood is close to completing a deal to purchase the famed Pebble Beach golf resort for about $800 million.

Ueberroth's group has been in exclusive negotiations with the Lone Cypress Co., current owner of the resort, to acquire Pebble Beach Co.--a property that includes the renowned Pebble Beach Golf Links, three other public golf courses, two luxury hotels and the famous 17-Mile Drive that winds through Pebble Beach and nearby Del Monte Forest. A spokesman for Ueberroth declined to comment when contacted about the sale Wednesday. A source close to the negotiations said, "Pieces are still in motion."

Later in the day, Palmer confirmed that the group was "in serious negotiations" for Pebble Beach.

The deal would mark the second time this decade that the legendary resort has been sold by Japanese interests. Lone Cypress, an investment partnership owned by Taiheiyo Club Inc., a Japanese golf resort company, and Sumitomo Credit Services Co., one of Japan's leading issuers of Visa cards, bought the Pebble Beach Co. from debt-ridden golf tycoon Minoru Isutani for an estimated $500 million in 1992.

Isutani lost a reported $350 million on the deal, having paid an estimated $850 million to a partnership headed by oilman Marvin Davis for the resort in 1990.

At the time of Isutani's sale to Lone Cypress in 1992, Pebble Beach was seen as a symbol of Japanese over-investment in American real estate. Pebble Beach was nearly $20 million in the red for every month Isutani owned it.

Lone Cypress bought Pebble Beach with ambitious development plans, some of them stalled by opposition from local homeowner and environmental groups. The company is close to finishing construction on a 24-room lodge, the Casa Palmero resort and spa, and has plans to build a new golf course and develop more than 300 home sites.

Sources said that Ueberroth, who headed the Los Angeles Olympic Organizing Committee for the 1984 Summer Games before serving as major league baseball's commissioner from 1984 to 1988, said he became interested in acquiring Pebble Beach when he heard about its availability.

He grew up in nearby San Jose, went to San Jose State and spent time at Pebble Beach in the '50s. Because of that, sources say, he retains a special interest in the site.

So, with no guarantee that a new owner wouldn't carve up the existing complex and parcel off individual properties, Ueberroth reportedly assembled an investment group headed by Palmer, the four-time Masters champion and winner of 60 PGA Tour tournaments; Eastwood, a local resident and former mayor of Carmel; and Richard Ferris, former chief executive officer of United Airlines and currently chairman of the PGA Tour policy board.

Ferris gained notoriety in 1998 for controversial comments about the Senior PGA Tour, dismissively describing it as "a nostalgia tour." Now Ferris is teaming with one of the marquee names on that tour, Palmer, in an attempt to buy perhaps the most famous public golf course in America.

Pebble Beach Golf Links is the annual site of the AT&T Pebble Beach Pro Am, a top PGA Tour event that became famous as the Bing Crosby event for so many years, and has hosted the U.S. Open in 1972, 1982 and 1992. It will host the U.S. Open in 2000 as well, along with this year's U.S. amateur golf championship in August.

"It's arguably the world headquarters of golf," Ueberroth said, "and it's something that's totally open to the public. And that's a special thing."

In addition to Pebble Beach Golf Links and the 17-Mile Drive, Pebble Beach Co. holdings include three golf courses along the Monterey Peninsula--Spyglass Hill, the Links at Spanish Bay and Old Del Monte--along with two existing hotels--the Lodge at Pebble Beach and the Inn at Spanish Bay--and the soon-to-be-completed Casa Palermo.

Sources said that Ueberroth's group expects to pursue the plans to develop the additional golf course and homes in some fashion, but that there was no timetable for completion of negotiations.

A source familiar with the internationally known area said, "The Taiheiyo Club and Sumitomo have done a great job of bringing that course back to probably its best standard ever. It's in beautiful shape--all the courses and the resorts, both Spanish Bay and Pebble."

Speculation is that the Ueberroth group will include a number of smaller investors, with a strategy to have enough people involved who care about golf to run the resorts and courses on a high plane.

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Fire Sale

Japanese investors have taken some heavy losses on trophy properties bought or built in the United States starting in the 1980s. Here are a few such purchases and details of the sales.

Rockefeller Center, New York

Mitsubishi Estate Co. pays $846 million in 1989 for majority stake. Company defaults on debt in 1995.

Hotel Bel-Air, Los Angeles

Sazale Group of Tokyo buys property for $110 million in 1989.

Company defaults on mortgage and the property is sold in 1995 to a relative of the Sultan of Brunei for about $60 million.

Hyatt Regency Waikola, Hawaii

Japanese investors spend nearly $400 million to open up 62-acre resort in 1988. Five years later, the property is sold for about $55 million to partnership that includes Los Angeles-based Hilton Hotels Corp.

Ritz-Carlton Huntington Hotel, Pasadena

Dai-Ichi Kangyo Bank Ltd. loans investors about $100 million to rebuild hotel. Investors default on loan and Dai-Ichi sells property for about $45 million in 1994.

The Pacific, Long Beach

Japanese construction company spends about $100 million to open a 16-story, high-rise condominium project in 1992. The building is sold several years later at a fraction of the cost.

Source: Staff reports; Researched by JESUS SANCHEZ/Los Angeles Times

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