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REAL ESTATE

Site of Hollywood gems eyed for development

July 06, 2007|Roger Vincent | Times Staff Writer

Two Hollywood landmarks, the Magic Castle and Yamashiro restaurant, are poised to be sold as the pace of development in the once-gritty neighborhood continues to sizzle.

The family that has owned the properties since shortly after World War II has been flooded with offers from developers that want to add structures to the 10-acre site, which is just above Grauman's Chinese Theatre, Hollywood & Highland and other attractions.

The terms of any sale will stipulate that Yamashiro and the Magic Castle, a private club for magicians, continue to operate as they have for decades, according to the properties' manager. Also on the 10 acres are the less recognizable Magic Castle Hotel, Hollywood Hills Hotel & Apartments and Magic Castle Park apartments, which could be redeveloped by the buyer.

The owners are 11 descendants of mid-century landlord Thomas O. Glover, who bought Yamashiro for $150,000 in 1948. They're ready to give up day-to-day control, said Andy Ulloa, Glover's stepgrandson. The key vote was cast by Ulloa's stepfather, Glover's son Thomas Y. Glover, who has helped run the complex for about 50 years.

"He is interested in divesting his interest and establishing security for himself," Ulloa said. "It's a good time to move on."

With Hollywood in the midst of a building boom, the property is highly sought after and bids have surpassed $70 million, people familiar with the situation said.

A mostly undeveloped site with panoramic views "is unheard of in the Hollywood Hills," said broker Marc Renard of Cushman & Wakefield, who represents the Glover family. "We see phenomenal interest in this site."

The Magic Castle is an Edwardian manor with French and Gothic elements built in 1908 by Rollin Lane, a Redlands financier and orange grower, and his wife, Katherine. By the '60s it had become a maze of small apartments.

Glover and his partner, television writer Milt Larsen, turned it into a clubhouse for magicians in 1963, and today it serves as headquarters for the Academy of Magical Arts Inc. Magicians perform for guests of the academy who have to know the password to unbolt a sliding bookcase in the lobby and gain entrance. (It's not a secret password; it's been "open sesame" for decades.)

As for Yamashiro, a replica of a palace in the Yamashiro Mountains near Kyoto, Japan, it was completed in 1914 by the Bernheimer brothers, who wanted a mansion to house their Asian art collection and brought hundreds of craftsmen from Asia to build it. The grounds were elaborately landscaped and what is probably the oldest structure in California was imported: a 600-year-old pagoda.

During the '20s the mansion was an exclusive social club for the Hollywood elite, including such actors as Lillian Gish and Ramon Navarro. After World War II began, Yamashiro was mistakenly rumored to be a signal tower for the Japanese and was vandalized. It went on to become a boys military school and then an apartment building. Glover restored it and turned it into a restaurant in 1960.

For local residents, the concern is that new buildings on the site will spoil the neighborhood's old-Hollywood ambience and add congestion to heavily burdened streets.

"We have been told there is room for 200-some condos," said Malcolm S. McNeil, president of Hollywood Heights Assn., a local homeowners group. There is already more than enough traffic in the area, he said. "Have you been to the Hollywood Bowl lately, especially on a Friday or Saturday night?"

McNeil said he hoped that the property would be acquired by someone "who cares about the neighborhood as much as Andy's family has over the past 40 years."

Ulloa said he was undecided about what the best additions to the property would be, although he thought that office buildings wouldn't be appropriate. And "given that condos are being built all over the place," he said, "we would like to do something more unique."

That suggests further hotel development. City approval for stores and other retail uses might be hard to come by because the land is zoned for residential use. Some observers expect to see a proposal for new condominiums, which have been profitable for developers in other parts of Hollywood.

Shaul Kuba, one of Hollywood's leading landlords, said land in Hollywood was becoming so expensive that buyers were at risk of overpaying. If a developer pays too much for land, he may find that he is not be able to build at all because his final costs would be too high to make a profitable return, said Kuba, whose company, CIM Group, owns the Hollywood & Highland shopping and entertainment center and several other commercial properties.

To make a profit from the Yamashiro and Magic Castle site after paying $70 million or $80 million, a developer would have to build 500 to 800 condominiums, Kuba said. "Is this going to be a project that the community is willing to accept?"

Real estate attorney Jerry Neuman of Allan Matkins agreed that rising prices were pushing Hollywood toward increasingly dense development.

"Eventually there is a point where you can't get enough density to support the land prices," Neuman said. "Are we getting close to that? It's possible. Whether Yamashiro falls into that category is uncertain."

Preservationist Robert Nudelman of Hollywood Heritage Inc. said the steep slope of the hilly site would help protect it from overdevelopment. "The geology limits what you can do," he said, "unless you build on stilts."

A buyer will probably be selected by the end of the year, broker Renard said.

Ulloa said he hoped to reinvest some of his profit in the new owner's development as he continues to help oversee operations of the Magic Castle and Yamashiro, which would be the new owner's tenants.

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roger.vincent@latimes.com

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