The largest parcel of land for sale in Los Angeles, that comes with precious grandfathered-in rights to build 12 feet higher than current code, has sold for a fraction of its worth after years of discord and some last minute legal wrangling.
A 157-acre parcel called "The Mountain," sold for $100,000 during a foreclosure auction earlier today, as the L.A. Times reported. To add yet another layer of intrigue to a story that has its share of discord over the past decade, the 'buyer' of the land was the trust who still held a lien on the property. By buying it back they had to say goodbye to the $200 million they were owed by the now-former owners (a status which they dispute, as I've explained below).
As the highest point in Beverly Hills (hence its name "The Mountain") it was once asking $1 billion for the entire patch of land but the price had recently been lowered to $650 million after there wasn't much luck finding a buyer. The property was seller-financed, so Secured Capital Partners LLC (the LLC that had owned it before today's auction) should have been making payments to the trust that owned the land but they fell into arrears to the tune of the aforementioned $200 million. Secured Capital Partners filed to obtain Chapter 11 bankruptcy protection one day before the trust was able to start foreclosure proceedings, but a judge denied the request for bankruptcy protection and an auction was scheduled for last week, as the Wall Street Journal reported.
In an effort to delay the auction, controllers of Secured Capital Partners transferred ownership of the property into a new LLC called Tower Park Properties but that only bought them a few days time. A new auction date was scheduled for today when representatives from the trust were there to buy it back for a mere $100,000. The story might not end here, however, since the Tower Park Properties had an open bankruptcy plan which required three weeks notice of default for a foreclosure. An attorney for the Tower Park Properties told the L.A. Times he plans to file a wrongful foreclosure suit if the estate tries to evict the duo that controls Tower Park Properties from the property.
The many twists and turns of ownership over this land turned into a saga somewhere around the year 2000 when then-owner, Herbalife-founder Mark Hughes, was found dead at the age of 44 from what was ruled an accidental and lethal mix of alcohol and the antidepressant Deoxpin. The property was entered into a trust that Hughes’ son, currently in his 20s, would inherit the entirety of at the age of 35, but in the intervening years the managers of the trust sold the property to Atlanta investor Charles Dickenson for $23.75 million. The seller-financed transaction evolved into a tumultuous partnership over missed payments from Dickenson and his partner Victorino Noval (who had served three years in prison after pleading guilty to tax evasion and mail fraud). Dickenson and Noval entered the property into Secured Capital Partners LLC, run by Noval’s son.
Prior to its current status, there were a few high-profile owners—or potential owners—affiliated with the land. Hughes had purchased the land from television personality Merv Griffin for $8.5 million in 1997 after Griffin gave up on his plans to build a massive complex on the site. (He only got as far as removing about 1 million cubic yards of dirt to create a level grade, according to Bloomberg.) Griffin had owned the property from approximately ten years, after purchasing it from Shams Pahlavi, the now-deceased sister of Iran’s last shah, Mohammad Reza Pahlavi. According to several reports Tom Cruise had placed a deposit on purchasing part of the land in the mid-2000s and Jeff Bezos and Brad Pitt had also expressed an interest.
None of those potential buyers ever progressed past the preliminary stages, and while the LLC obtained several permits to build on the land, nothing has ever materialized—though it has spent a reported $30 million on bringing the infrastructure up to what the site would need to support multiple families living there. That included electrical works, an advanced storm drain system, a fire hydrant booster system, fiber optics, roadwork and more than 5,000 plants and trees. An intimidating security gate blocks access from the road.
There are very few properties to use as a comparison to this one. A home called "The One" is said to have an asking price of half a billion for its 100,000-square-foot compound in Bel Air, California. Also in Bel Air is the undeveloped 258 acres of Senderos Canyon that is asking $75 million (though that is at the bottom of a valley, rather than high over the city). Land this size could support large-scale homes, so for comparison's sake here is one of the largest new homes ever built in the approximate area: a 20,000 square foot house with interior waterfallasking the potential record-breaking number of $43.9 million.
As far as completed sales, California recently saw its records broken by the $120 million sale of The Manor, the home formerly belonging to television producer Aaron Spelling and his wife Candy. And the record for the priciest home ever sold in the U.S. belongs to hedge funder Ken Griffen for a $238 million penthouse in New York.