The most opulent house in Los Angeles sells for less than half of its asking price
On Thursday, the mega-mansion known as “The One” sold for $126 million at a bankruptcy auction. Even with a 12 percent auction charge, reducing the total to around $141 million, that’s a significant decrease from the $295 million asking price.
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The Bel-Air home broke the record for the most expensive house sold at auction, but it fell well short of venture billionaire Marc Andreessen’s $177 million purchase of a Malibu mansion in October. The most significant money ever paid on a home in the United States was $238 million in 2019 by hedge fund tycoon Ken Griffin for a New York City penthouse.
By March 8, when documentation must be delivered to U.S. Bankruptcy Court Judge Deborah Saltzman, who will conduct a hearing later this month on whether or not to accept the sale, the bidder will be revealed. The winning bidder will probably be a limited liability corporation, a legal structure often employed by the rich to conceal real estate transactions.
Over the previous several months, more than three dozen potential purchasers viewed the 944 Airole Way home over the last several months, including billionaires from the Middle East, Asia, and California.
Concierge Auctions claimed the auction site had visits from 170 countries, including Australia, the United Kingdom, Germany, France, and Italy, and produced 2,800 leads.
Only five bidders from the United States and New Zealand participated in the online auction after it began on Monday. Most of the action took place inside the final few minutes.
Given that some large houses have gone bankrupt in the previous several years, Compass agent Brent Chang said the findings were a cautionary story that may push builders to consider smaller. Given Russia’s invasion of Ukraine, he also questioned whether the timing was wrong.
“The buyer pool for this is quite narrow,” he said, “and with everything going on in Russia, those Russian billionaires who may have been your best shot to acquire it are now backing out.”
According to a March 2 court filing, the debt tied to the property was initially at $180 million but has now ballooned to $256 million as additional creditors have filed claims. Many creditors may suffer losses as a result, even though most of the auction house’s 12 percent fee will be remitted to the bankrupt estate, which is unusual.
Don Hankey, a millionaire from Los Angeles, is the single biggest creditor, contributing $106 million to developer Nile Niami’s dream project. According to the lender, he is due more than $130 million in secured debt, which includes money he supplied in bankruptcy to restore and spruce up the property for sale.
Hankey, who had previously said that if the property were severely underpriced at auction, he would bid for it, claimed he did not make an offer. He claimed the sale should enable him to recoup the money he invested in the project, but he was startled by the final price.
“The person who purchased it got a fantastic bargain.” “He has individuals that are ready to work for $50,000 a day simply to make ads and films,” Hankey claimed.
The hilltop property, estimated to measure 105,000 square feet, was offered for $500 million while under construction some years ago but failed to find a buyer. It was declared bankrupt in October when Hankey foreclosed on a $106 million loan defaulted on by Crestlloyd, Niami’s limited liability company that owns the property legally.
According to turnaround expert Lawrence Perkins, the “market spoke” during the auction, who was put in control of Crest Lloyd after the property was forced into bankruptcy. However, he did say that it was his job to continue to field late proposals that may outbid the auction price.
“If someone comes in and there’s a greater offer, I have a duty.” “We’re not recruiting them,” he said, “but it’s not closed until it’s closed.” “Some individuals are averse to bidding at auctions.”
According to broker Stephen Shapiro of Westside Estate Agency, the low price reflected Niami’s “out-of-control ego,” who erected an enormous mansion that wasn’t indeed a home.
He said, “Most builders design houses that people can live in.” “He constructed one assuming that this ridiculous over-the-top residence would be in high demand.”
Niami has been trying to reclaim ownership of the land.
In December, he suggested developing The One Coin, a cryptocurrency backed by the estate that would pay off all home obligations.
A Niami representative stated the company would not be commenting on the auction before it. On Thursday, he could not be contacted for comment.
After a flurry of expensive buildings in the region’s glittering hillside and seaside villages, The One is the latest trophy property to go bankrupt.
Concierge Auctions established an auction record last year when it sold a Beverly Park mansion for $51 million, which was still more than $100 million less than the asking price. The One, according to Concierge, was the most significant residence ever sold at auction.
Predicting how much The One will sell for in the luxury real estate world has become a game of guessing, with some believing it is the perfect trophy house and others labeling it a white elephant.
A 4,000-square-foot guesthouse, a sky deck with cabanas, a private theater, a full-service spa, a nightclub, and even an outdoor jogging track and moat are all included in the property. It contains 42 full bathrooms and 21 bedrooms.
On the other hand, the mansion may become a project for the buyer.
The home isn’t finished and doesn’t have a certificate of occupancy since municipal inspectors haven’t signed off on critical permits for grading, electrical, and other work. It might also contain building problems and zoning code breaches, according to court filings.
The house was advertised on the Concierge website as the “biggest in the urban world,” however, many believe a 27-story property in Mumbai, India, owned by a millionaire and estimated to be 400,000 square feet to be the world’s largest, outside of royal palaces. It may, however, be the country’s biggest.
The winning bidder is legally obligated to consummate the deal by the end of the month or forfeit a $250,000 deposit, according to the conditions of the auction agreement.
The court will assess whether the winning bidder has the financial means to finalize the transaction, the effect on creditors, and other factors when deciding whether or not to sanction the agreement.
Inferno Investment, a corporation headed by Julien Remillard, a longstanding Canadian investor of Niami’s, is another major creditor. According to Inferno, it is due $24 million. Yogi Securities, an investment entity owned by Joseph Englanoff, an L.A. doctor and a longstanding Niami investor, claims it is owed $14 million.
Bret Parsons, a Compass realtor, believes the price reflects the value of the hilltop property, which has magnificent views of the city rather than the home itself.
“It’s a pity that Mother Nature’s priceless resources might be exploited for frivolous prizes,” he remarked.