It was the world's most expensive real estate listing, but after a year on the market and a bitter legal battle, the only record it can lay claim to now is world's biggest discount.
The 63ha undeveloped hilltop property in the coveted Beverly Hills 90210 zip code was put on the market last year with an asking price of US$1 billion (NZ$1.57 billion). But there was no Hollywood for the empty tract of land which is known in LA as the Mountain, after sold at a foreclosure auction this week for US$100,000.
That's quite a comedown for a sprawling piece of prime real estate that had once reportedly attracted the interest of Tom Cruise, Brad Pitt and the sister of the Shah of Iran.
So why the discount? The property, which agents had touted as coming with consent to build more than 100,000sq m of living space across multiple residences, got bogged down in a complex and bitter legal battle and bankruptcy proceedings.
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The buyer is the estate of Mark Hughes, the late American business mogul who was the founder of Herbalife, a global marketing company that sells dietary supplements and sports nutrition goods.
The estate used to own the property and had sold it in 2004 to an investor, Chip Dickens. Dickens had borrowed US$45 million from the estate to buy the property but that debt rose to about US$200 million. In 2016 Dickens transferred ownership of the Mountain to a limited liability company operated by his business partner, Victor Noval, the son of a convicted fraudster.
The company was unable to clear the debt and tried to obtain Chapter 11 bankruptcy last month in a bid to hold off foreclosure proceedings but were rebuffed by a judge. The Hughes estate bought back the property - and with it the US$200 million in debt it had accumulated.
The Mountain was marketed for sale by real estate agent Aaron Kirman, who specialises in high-end property and is regular fixture of US real estate shows.
Although the US$1 billion price tag got headlines, it also attracted a fair amount of criticism. The Guardian last year quoted a Los Angeles real estate agent as saying: “There is no such thing as a billion-dollar property in Los Angeles and probably nowhere. It’s not even close. For premium tracts of land like this, US$50m-US$100m is what you’d expect. Beyond a hundred million is very rarefied air, and this is well beyond. They’ve put an extra zero on this.”
A year later and that criticism is on the money.
