The Chinese hospitality company that acquired the landmark Yamashiro restaurant building in the Hollywood Hills is seeking to evict its operator, possibly to open a more upscale eatery in its place.
JE Group filed a lawsuit last month to oust the operator just two days after spending nearly $40 million to buy the 7-acre property featuring the replica of a Japanese palace where Yamashiro has been in business since the 1960s.
Negotiations for a new lease broke down after the Beijing company demanded about $100,000 in monthly rent, or about "three to four times" above the current rate, said Thomas Y. Glover, Yamashiro's principal owner.
"We certainty had hoped [to stay], but what they were asking for rent was impossible," he said.
During negotiations, Glover said JE informed him there was a group willing to meet those rent demands for the 20,432-square-foot building, which includes a cocktail lounge and banquet hall and can seat up to 512.
An average meal check at the restaurant, which serves sushi and Cal-Asian fare, runs about $50 for one diner, including drinks. "If they are talking about $100,000 a month, they would have to at least double the prices," Glover said.
Paul Pruitt, founder of New School Restaurant Consulting, said he wouldn't be surprised if JE goes upscale, given the Hollywood Hills property's sweeping views of Los Angeles.
"It has a ton of potential. It has great views internally and externally," he said. "It just feels dated."
But to be successful, he said, the new operators would need to "exponentially" improve the service and food quality at the location, which is popular with tourists and those celebrating birthdays, weddings and other special events.
Glover said JE has told him the unnamed group was willing to pay $88,800 in rent for the first year and $98,800 beyond that — the same terms he was offered. The lease would encompass a nearby bar overlooking a 600-year-old pagoda and swimming pool, he said.
The group also was willing to possibly keep some of the current staff and acquire the Yamashiro name and liquor license, Glover said he was told, but he felt the offer was "lowballing the value" of those assets.
An attorney and a representative for JE Group did not respond to calls seeking comment.
For now the restaurant plans to stay open until it is forced by court order to leave. A hearing to set a trial date in the eviction lawsuit is scheduled for April 28.
Glover said he hopes to at least delay the eviction so a transition to new operators is smooth, allowing a chance for some employees to keep their jobs and for scheduled events to go on as planned.
Glover, 76, is a member of the family that owned the property off Sycamore Avenue since his father purchased it in 1948. The Yamashiro building, a replica of a palace near Kyoto, Japan, was completed in 1914 by two brothers who wanted a mansion to house their Asian art collection. After Glover launched the restaurant, it soon became known for its views of the city.
The sale to JE was completed March 14 amid a wave of high-profile Chinese investments in Southern California. The sale includes a small hotel and some apartment units on the site, but not the nearby Magic Castle, a private club for magicians also owned by the family.
A lease extension was not included as part of the sale, which Glover said he resisted but was desired by other members of the family.
"It's been a very heartbreaking thing for us. I have been there 50 years, and the property has been in my family" even longer, he said. "It's been a very important part of people's lives. To see that come to an end is really tragic."
Over the years, the restaurant has hosted celebrities and had a star turn in movies such as "Gone in 60 Seconds" and "Memoirs of a Geisha."
JE owns seven hotels in China and is known for refurbishing the historic properties it owns.
A day after the deal closed, JE Chairman Kang Jianyi vowed to make few changes, except to renovate the buildings. In an interview through an interpreter, Kang told The Times that JE planned to keep a restaurant in the Yamashiro building and continue to hold special events there.
Kang said his company was negotiating with Yamashiro to stay open but acknowledged a new restaurant could be brought in.
Still, at the time, John Tronson, a principal with commercial real estate brokerage Avison Young, said the nearly $40-million price tag seemed a bit high if JE didn't build something else on the property.
Tronson said this week that boosting monthly rent to $100,000 would certainly help — if JE can get it.
"There are very few restaurants that could pay those kind of numbers," he said. "It would be the top 1% of all the restaurants in the country in terms of high volumes and high margins."