Hollywood Palladium Put Up for Sale (Exclusive)
The Hollywood Palladium, which has hosted musical acts ranging from Frank Sinatra to U2 to Jay-Z, is being listed for sale by owner LSREF 2 Clover Property 4 LLC, the entity of an undisclosed investment group. The historic live venue at 6215 Sunset Blvd. is expected to be formally listed June 4.
The property could fetch up to $60 million, according to sources with knowledge of the Hollywood commercial real estate market. The Palladium, which is leased by concert and events company Live Nation Entertainment, is being marketed as a development opportunity; the 3.55-acre site includes a 90,000-square-foot surface parking lot that a developer could use as the site for a hotel or office tower.
Given the Palladium's iconic nature, if a development were to move forward, the theater is not expected to be demolished, though it is not protected by any historic designation. The Palladium received a thorough renovation after it was purchased by Commonfund Realty Investors and Newport Capital Advisors for $68 million in 2007. The Streamline Moderne theater reopened in October 2008 with a concert by Jay-Z.
John Tronson, a principal with commercial real estate brokerage Avison Young, says the Palladium has long been on a "parallel track with Hollywood’s general destiny." He says that when Hollywood suffered through an era of decay in the 1980s and '90s, the "only parties anyone ever wanted to throw there were raves." But since the remodel, which restored the building's iconic neon signage, top-tier acts are once again playing at the Palladium. "This is probably one of the most significant buildings in Hollywood," said Tronson, who has the listing.
Last year, LSREF acquired the mortgage note on the property from lender Irish Bank Resolution Corp. -- the successor entity of Anglo Irish Bank, which was nationalized by the government of Ireland during the global economic meltdown. In March, LSREF took ownership of the Palladium by foreclosing on the Commonfund and Newport Capital investment entity that held the property.
Much of the 67,000-square-foot Palladium building is leased by Live Nation, which signed a 20-year lease for the property in 2007. The lease covers everything but the building's 9,200 square feet of vacant retail space, which fronts Sunset Boulevard. Live Nation uses the property for various concerts; its upcoming schedule includes shows by The Temper Trap, Scissor Sisters, The Cult and Fiona Apple. (The company also subleases the space for other concerts and events.) The property currently generates about $2 million a year from the Live Nation lease and the 300-space parking lot.
The Palladium, which has a capacity of 3,900, was built for $1.6 million in 1940 by Los Angeles Times publisher Norman Chandler. In the 1960s, both President John F. Kennedy and Martin Luther King Jr. spoke there; it has also hosted the Emmy Awards and Grammy Awards, was the longtime home of The Lawrence Welk Show and was known in its early years as a venue for dancing and live music.
"Tommy Dorsey played there at the very beginning, along with all the big names -- the Palladium was where they played in the 1940s and '50s," said Leron Gubler, president of the Hollywood Chamber of Commerce. The venue hosted the WGA Awards in February.
Tronson said he expects the property to attract international interest. Already, interested parties include "very recognizable hotels that are tied to the music business that would go there," he said. Under one scenario, a real estate developer could buy the property, build a tower on the surface parking lot and lease the building to a hotel operator, Tronson said. The Hard Rock Hotel company, which is owned by Brookfield Asset Management, is the obvious candidate, and Gubler said rumors that a Hard Rock Hotel would come to Hollywood have persisted for about a decade. "I do agree it would be a perfect fit," Gubler said. (Tronson declined to name the parties who are interested in the site.)
Christopher Bonbright, a principal at Avison Young, also has the listing, along with Jennifer Schwartzman and Brittain Youngblood of Newmark Knight Frank.
A media representative for the Hard Rock Hotel company did not respond to an e-mail seeking comment. Commonfund and Newport Capital could not immediately be reached for comment.