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LOS ANGELES BUSINESS JOURNALVolume 34, Number 36 September 3 - 9, 2012 • $3.00

labusinessjournal.com

T H E C O M M U N I T Y O F B U S I N E S S TM

By ALFRED LEE Staff Reporter

To some people in town, Steven Roth is bestknown as a former Hollywood player, an agent andproducer who worked with everyone from RobertTowne to Michael Douglas and was in on the groundfloor of the Creative Artists Agency. To others, he is

a patron of the arts, a contemporary art collectorwho’s been a trustee at both LACMA and MOCA.

But for most of his life, the foundation of Roth’swealth has come from a family business – the multi-billion-dollar South Gate company World OilCorp., founded by his father, Bernard Roth. Nowthat both parents have recently died, he is locked in afamily feud for its control.

Industry insiders say the fight comes down to astruggle between Steven and his older brother, WorldOil President Robert Roth, over various parts of the

company, which is one of the largest privately heldcompanies in Los Angeles County.

“There’s infighting between Steven and Robert,” saidBob van der Valk, a petroleum industry analyst in Terry,Mont. “Robert’s trying to buy Steven out. I think Robertwants to combine the whole thing as one company andjust be able to run everything under one banner.”

The fight has become public as Steven has begun alegal battle against Robert and a third brother, another

Hollywood Figure, Arts Patron in Family Feud

Please see PETROLEUM Page 32

New coffeeshops, full ofbeans, saythey’re betterthan Starbucks.PAGE 3

MakingIt Big

PETROLEUM: Death of parentssets off fight over big oil company.

By HOWARD FINE Staff Reporter

At first glance, Wal-Mart Stores Inc.’s new strate-gy to penetrate Los Angeles County by opening storesin vacant retail locations in urban neighborhoodsappears to be in trouble.

After all, a judge last month placed a hold on workon a store in Burbank and a nasty fight continues overpermits granted for a store in L.A.’s Chinatown. Butthese high-profile disputes are masking the success ofthe strategy in other parts of the county.

Later this month, the Bentonville, Ark. chain is

expected to open a store in avacant Mervyn’s site inTorrance, with stores in vacantretail sites in Panorama City,Downey and Bell Gardens tofollow later this fall. Three ofthese store sites face little or noopposition. After push-back inTorrance, Wal-Mart dropped itsplanned grocery component.

Also, a lawsuit against the project was dismissed.And just last week, Wal-Mart announced it plans to

open yet another store at a vacant Mervyn’s locationinside a West Covina shopping mall, also later this fall.

By JACQUELYN RYAN Staff Reporter

THE long-anticipated and controversialredevelopment of Century City’s iconicHyatt Regency Century Plaza hotel has

taken a big step forward.After three years of heated back-and-forth

between the developer, community groupsand preservationists, a sweeping new planthat strikes a compromise was quietlyapproved by the Los Angeles City PlanningCommission recently. Barring unforeseenopposition, it is expected to pass the CityCouncil this fall.

Developer Michael Rosenfeld plans tokeep the crescent-shaped hotel but extensivelyrenovate it. He will add two condo towersbehind the hotel.

The approved plan is a dramatic reimagin-ing of an earlier proposal, which would haverazed the hotel and built two large towers that

Please see DEVELOPMENT Page 33

Please see HOSPITALITY Page 32

Wal-Mart Finding Its Way to L.A.

Scaled-back changesto Century Plaza looklike an easier sell.

Number of Wal-Martsto open in L.A. byyear end – fastest

pace ever.

DEVELOPMENT: Moving into oldretail sites is proving successful.

By JONATHAN POLAKOFF Staff Reporter

Elected leaders often complain about localnews coverage they believe is too critical orunfair. But in Beverly Hills, the City Council isdoing something about it: The city has decidedto start its own cable news show.

Many link the decision to a soured relation-ship between some city officials and one newsoutlet in particular: the Beverly Hills Courier.

Please see MEDIA Page 34

In Beverly Hills,They’re LiterallyMaking the News

Turn of the Century: Above, rendering shows addedtowers in redevelopment plan for Hyatt Regency inCentury City. Left, the hotel’s current profile.

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32 LOS ANGELES BUSINESS JOURNAL SEPTEMBER 3, 2012

included 100,000 square feet of office space.The office space is now gone.

“I think the project is better than what weinitially conceptualized, which just proves thatthe collaboration of the various groups canresult in a win-win situation,” Rosenfeld said.“It’s truly honoring the past, embracing thefuture and meeting the goals of the community.”

Rosenfeld’s company, Woodridge CapitalPartners of Los Angeles, and financial part-ner D.E. Shaw Group of New York, boughtthe 726-room hotel at 2025 Avenue of theStars for $367 million in 2008.

The developers want to build 353 luxurycondos in two matching 46-story high risesand on the top five floors of the existing hotel.That means the renovated hotel would bereduced to 394 rooms and suites.

In addition, nearly 105,000 square feet ofshops and restaurants will be built in new andrenovated space in various parts of the site.

Developers did not specify a cost of theproject. However, $2 billion was the estimat-ed cost a little more than a year ago, but thatwas for a somewhat larger project.

The original hotelstructure, designed byMinoru Yamasaki, arenowned architectwho also designedNew York’s WorldTrade Center, hasestablished itself as amodern landmark sinceits 1966 construction.Bob Hope hosted itsopening charity gala,

and guests have included Ronald Reagan andinternational figures such as Marshal Tito,Moshe Dayan and David Ben Gurion. At theurging of preservationists, it was added to theNational Trust of Historic Preservation’s list of“endangered historic places” in 2009 in aneffort to prevent its demolition.

The new redevelopment plan, designed byarchitecture firms Pei Cobb Freed &Partners and Gensler, sailed through lastmonth’s planning commission meeting withno one speaking against it.

Michael Eveloff, president of the Tract7260 Homeowners Association, which abutsthe project, said that the 650 homeowners herepresents as well as roughly 5,000 otherhomeowners who are part of a large coalitionsupport the project after years of discussion.

“The opening line of my comments (tothe Planning Commission) was, ‘Usuallywhen you have a homeowner here they areopposing the project, but in this case I’mhere to do the opposite.’ It looked like theygot hit by bolt of lightning,” he said of thecommission members’ reaction.

Concerns about traffic congestion wereallayed by the elimination of the office space,which had been planned for the towers, onceenvisioned to be as high 50 stories. The home-owners associations also received a separatecommunity benefits agreement he wouldn’tdisclose, citing a confidentially agreement.

Extensive renovationRosenfeld is not a novice to development

or hotels.His snapped up the 57-room Colony

Palms Hotel in Palm Springs for $15 millionin June. He also owns the Hotel Californianin Santa Barbara and the Fairmont hotels inHawaii and San Francisco, which he boughtfor $200 million in May and is overseeing its$20 million renovation.

However, the Century Plaza would easilybe his largest project. If approved by CityCouncil, it will likely break ground in 2014and be built during at least five to six years.

Renovations would update the hotel roomsand suites on the lower nine floors and 63condos on the top five. The large ground floorballroom would get extensive renovations.Also, the developer will renovate a meetingspace, a 14,000-square-foot fitness center and11,000 square feet for restaurants and shops.

Also set for extensive changes would bethe front of the hotel, where ground floor

glass walls would be removed, creating abreezeway. And the sunken plaza in frontwould be filled in and two restaurants totaling5,000 square feet constructed there. Plans callfor nearly 89,000 square feet of restaurantsand shops to be built in the rear, in structuresseparate from the two high rises.

About a year after the hotel renovationbegins, Rosenfeld plans to begin construc-tion of the two condo towers where the pooland other outdoor space is now. The poolwould be moved to the roof of the hotel andanother pool for condo residents is plannedfor a roof of one of the towers, according toMark Armbruster, an attorney who repre-sented Rosenfeld.

The towers would include 145 condoseach and additional housekeeping rooms.Construction is expected to take about threeand a half years. The plan also includes twoacres of public plaza and courtyard space.

The hotel likely will stay open duringmost of the construction, but may need toclose for some of the work. Rosenfeld said hehasn’t determined how long that may be.

Hyatt Hotels Corp., which was installedas its operator in 2005 when Sunstone HotelInvestors Inc. of San Clemente bought thehotel for $293 million, will remain.

The Los Angeles Conservancy and theNational Trust for Historic Preservation,which fought against the hotel’s demolition, ispleased with the current redevelopment.Conservancy Executive Director LindaDishman commended Rosenfeld for his will-ingness to work with her group and to find away to keep the historic structure.

“They’ve shown vision and creativity in

revising their project in a way that not only savesthe historic hotel building, but celebrates it as itscenterpiece,” Dishman said in an e-mail. “Thisproject exemplifies the fact that development andpreservation are not mutually exclusive.”

Homeowners on boardHowever, there remains the challenge of sell-

ing the condos in the market, which has attract-ed several other high rise residential projects.

Westfield Group, which owns the outdoormall across the street from the Century Plaza,plans to build a 39-story residential buildingsteps away and JMB Realty Corp. wants tobuild a 37-story condo tower

What’s more, some already completedprojects have had difficulty moving units inthe slow housing market.

Related Cos. built the ultra-luxuriousCentury condo project next door in 2009. The42-story tower, designed by Robert Stern, stillhas to sell out its 140 units. Also selling slowly isthe Carlyle, a 24-story condo tower on WilshireBoulevard that Rosenfeld started but sold offearly in construction in 2007 to Elad Properties.

Rosenfeld believes that by the time theCentury Plaza condos are for sale, the realestate market will have recovered enough toabsorb more luxury condos.

Prices have not yet been disclosed, butwith residents having access to hotel ameni-ties such as room service, they could be com-mensurate or higher than the other new luxu-ry condos. The Carlyle has a 3,535-square-foot unit currently listed for $3.9 million, orabout $1,100 a square foot.

Stephen Shapiro, chairman at luxuryresidential brokerage Westside EstateAgency, said even with a recovering realestate market, the Century Plaza condoscould be hard to sell.

“We’ve had a long history of condos thathave not achieved or exceeded their salesexpectations,” he said. “Everything has beenlanguishing on the market. They get into priceranges where you can buy a nice house.”

However, Bill Witte, president of RelatedCalifornia in Irvine, a unit of Related thatdeveloped the Century, said the new projectmay improve prospects for all the condodevelopments.

“We’ll have to see how this unfolds but tothe extent he’s adding some retail, that’s prob-ably a plus for our homeowners,” Witte said.

“Even assuming this is approved as pro-posed, the ultimate cost and sales would besufficiently far out in the future that it’s notcompetition for the Century.”

Hospitality: Century Plaza Plan Passes Key Hurdle

Petroleum: Brothers Battle Over Future of Family Firm

Continued from page 1

Towering: The redeveloped hotel with twin towers, shown in rendering.

former Hollywood player, film producerRichard Roth, alleging that the two aresqueezing him out of World Oil’s oil and wasterecycling subsidiary, DeMenno-Kerdoon.

The Compton subsidiary alone is worthabout $225 million,according to court doc-uments, and is thelargest such business inthe Western UnitedStates. But it’s only afraction of parentWorld Oil, whichreported nearly $2.4billion in revenue to theBusiness Journal lastyear, ranking it No. 11

on the publication’s list of the county’s largestprivate companies.

Despite the fighting, Steven and Robertcontinue to work together at the company, evensharing a secretary.

Tim Hamilton, a petroleum industry con-

sultant in McCleary, Wash., said such squab-bling is typical after the parents in a familybusiness die.

“When there’s a fight like this it’s alwaysover the same thing – the economic value ofthe asset and how to divide those assets,” hesaid. “It’s all just human nature. It’s the factthat it’s a billion-dollar company that makes itinteresting.”

Richard and Robert Roth declined to com-ment through their attorneys. Steven Roth didnot return calls and e-mails for comment. Hisattorney declined to comment.

Pioneering companyDespite its billions in revenue, World Oil is

a small player in the national petroleum indus-try, where it is best remembered as a major pio-neer of the self-service gasoline station.

The company’s early success hinged on thatone innovation. In 1938, Bernard Roth openedhis first gas station in South Los Angeles. Itstruggled, until he introduced the idea of cus-tomers pumping their own gas. By doing awaywith attendants, he was able to lower prices.

Major oil retailers fought the concept, and it

wasn’t until the oil price shocks of the 1970sthat the model caught on. By then, the compa-ny had grown to about 30 gas stations, most ofthem branded with such company names asArco and Chevron. Roth bought the underly-ing real estate each time.

Later, the company diversified, expandinginto asphalt production, trucking, marine ter-minal operations and real estate develop-ment. In the 1980s, it bought an 80 percentstake in oil recycler DeMenno-Kerdoon outof bankruptcy.

As of last year, the company reportedlyoperated about 80 gas stations in Los AngelesCounty and 40 elsewhere.

During the time of the company’s diversifi-cation, Robert Roth served as president. Theother two brothers have had varying degrees ofinvolvement.

During the late 1970s and 1980s, Steven andRichard made their names in Hollywood.Steven joined a group of former agents fromWilliam Morris Agency to become one of thefirst partners at the agency CAA, while Richardbecame a producer of films including “Julia,”“The Way We Were” and “Blue Velvet.”

Screenwriter Joe Eszterhas, a formerclient of Steven’s at CAA, described him in hisautobiography as “a free spirit drawn to longgetaway weekends with people like DebraWinger.” But the brother also displayed shrewdbusiness acumen. A chapter about the earlydays of CAA in Mark Litwak’s “Reel Power”describes how Steven would aggressively sellmovie packages even if the attached directorsand stars said no.

“He could make the deal so rich that no sen-tient human being would be able to pass on it,”screenwriter David Freeman was quoted saying.

Steven left CAA to become a producer,then became a vice chairman at rival agencyInternational Creative Management, only toreturn to producing yet again. His list of cred-its includes the Bill Murray vehicle“Scrooged” and the Arnold Schwarzeneggerfilm “Last Action Hero.”

During the 1990s, Steven turned his focusto the family business as the executive vicepresident of World Oil.

He also continued the family’s efforts in

Continued from page 1

Please see FAMILY page 33

Steven Roth

Rosenfeld

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