Billionaire’s Home-Buying Binge

December 12, 2011 | Comments Off on Billionaire’s Home-Buying Binge

One of the nation’s most voracious consumers of trophy real estate is back on the hunt.

Since the mid-1990s, software billionaire Larry Ellison has accumulated hundreds of millions of dollars worth of top-shelf properties around the world. The portfolio of Oracle Corp.’s co-founder includes five adjacent lots in Malibu, Calif.; a Newport, R.I., mansion formerly owned by the Astor family; a historic garden property in Kyoto and an estate in Rancho Mirage, Calif., with a private, 19-hole golf course.

The list of serial buyers of trophy properties, while thinning in recent years, includes Paul Allen along with Roman Abramovich and other Russian oligarchs. Mr. Ellison has a distinctive buying pattern: When he finds an area he likes, he takes a flood-the-zone approach. He often buys several adjacent properties to combine into a single sprawling compound. At the same time, he acquires other noncontiguous properties nearby, increasing his overall holdings in a desirable area.

Mr. Ellison has been applying this approach to a new location: Lake Tahoe, the resort area straddling the California-Nevada border. Records show Mr. Ellison has spent $102 million in the last several years buying property, both on and off the market, to assemble three different parcels fronting the 191-square-mile lake. On one of them, purchased over three years for a total of $58 million, Mr. Ellison is constructing a compound with more than 18,000 square feet of living space as well as a pond with an island, waterfalls and a tennis court with a pavilion, according to plans submitted to Washoe County, Nev.

Ellison bought this $49 million, 249-acre Rancho Mirage, Calif. estate..
Photo: Carl A. Eklund, Trustee of BLX Group

Mr. Ellison declined to comment. An examination of public records and interviews shows that the billionaire sportsman acquires properties in the same determined way he goes about his other business, whether it’s his hostile acquisition of rival PeopleSoft in 2005 or his successful bid to win the America’s Cup sailing competition last year, an effort on which he reportedly spent $100 million.

The third-richest American, with a net worth of $33 billion, according to Forbes, he was close to fellow tech-company founder Steve Jobs. Mr. Ellison spoke at Mr. Jobs’s memorial service. He has two grown children, Megan and David, both in the movie business, and is recently divorced from his most recent wife, romance novelist Melanie Craft.

Ellison will spend $15 million on this 2 acre parcel with a beach near Snug Harbor, Lake Tahoe.
Photo: Kenny Blum for The Wall Street Journal

Real-estate observers say Mr. Ellison is known for getting what he wants, pursuing properties he’s interested in regardless of whether or not they are on the market. “Larry’s philosophy has always been, ‘Buy the best, without compromise,’ ” says Kurt Rappaport, co-founder of the Westside Estate Agency, who represented Mr. Ellison in several of the Malibu deals. Mr. Rappaport declines to address specific deals but says that Mr. Ellison views prime real estate as a scarce commodity that can’t easily be replicated.

Mr. Ellison sometimes sends an associate to scout out a property before he visits, according to people who have been involved in his real-estate transactions. Mr. Ellison can be quick to act, sometimes making a decision after a single walk-through. “He was very much, ‘I want it, here’s the check, OK, move,’ ” says Christine Mitchell, whose husband sold Mr. Ellison a 1.6-acre lot on the eastern shore of Lake Tahoe for $11.7 million in 2006.

Mr. Ellison’s other holdings include two properties in Woodside, Calif., a wealthy Silicon Valley community. One, a 23-acre estate modeled on a 16th-century Japanese emperor’s residence, was designed and built over nine years and completed in 2004, according to San Mateo County. In 2011, the county assessed it at $70.4 million. The other was purchased for $23 million in 2005 and is now for sale, asking $19 million.

In San Francisco’s tony Pacific Heights neighborhood, he owns a five-bedroom, four-level home, purchased in 1998 for $3.8 million. Last June, Mr. Ellison sued his neighbors alleging that trees on their property were obstructing his views of San Francisco Bay and harming his property values; the suit was settled out of court in May.

$58 MIllion: The cost to assemble this Incline Village, Lake Tahoe property.
Photo: Kenny Blum for The Wall Street Journal

Lake Tahoe, with its pristine waters and world-class skiing, has long been a seductive draw for Bay Area residents. Incline Village, the town on the Nevada side of the lake where Mr. Ellison has made a number of his buys, bears the nickname “Income Village” for its wealthy residents and its reputation as a tax haven (Nevada has no personal income tax).

At Tahoe, Mr. Ellison struck in 2006, according to public records and individuals familiar with some of the deals. Through his limited-liability company Tahoe Estates, he bought parcels along three different areas of the lake that year. He spent $14 million on 2.2 acres in Incline Village, $12 million on 5.7 acres near the gated community of Glenbrook on the east shore of the lake and $11.7 million on 1.6 acres near Snug Harbor, a few miles south.

Mr. Ellison created three noncontiguous lakefront parcels in eight separate deals, sometimes without sellers realizing he had bought adjacent property. He assembled the Glenbrook-adjacent property, a forested, 12.6-acre parcel with a pebbly beach and several cabins built by previous owners, in three separate deals in 2006, 2007 and 2009 for $29 million. He put together the Snug Harbor property—a 2.1-acre parcel which has a sandy beach and, at the time of purchase, a 10,000-square-foot home, a beach house, a guest house and other buildings—in 2006 and 2009 for a total of $15 million. Plans show he wanted to remodel one of the houses and install a heated driveway.

The property has about 420 feet of lake frontage, according to public records, as well as two private piers and a private beach. Plans filed with Washoe County show more than eight separate structures totaling more than 18,000 square feet, including a main house with a pool and spa overlooking the lake, a beach house, a cottage and a writer’s cabin.

According to the plans, the main house, three-bedroom beach house and “West House” are located on the side of the property closest to Lake Tahoe. The writer’s cottage and a clay tennis court and tennis pavilion—with a lounge, fireplace, fold-down bed and powder room—occupy the middle of the property. Closer to the street are another cottage and a caretaker’s cottage. A guard house is at the entrance.

The compound is scheduled to be completed next fall, according to a construction schedule filed with the Tahoe Regional Planning Agency.

In Incline Village, locals say Mr. Ellison’s presence has been relatively free of controversy. Neighbors say his compound evokes the feel of old Tahoe and that Mr. Ellison has done a meticulous job of making sure the house fits into the surroundings. “It’s in keeping with the rustic atmosphere of the mountain community,” says Mr. Busick, who has since downsized to a condominium a few doors away from Mr. Ellison.

Resident Chuck Weinberger says conversation among locals revolves around the scope or specific details of the project, such as the time flatbed truck after flatbed truck ferried to Mr. Ellison’s construction site boulders so large the trucks could accommodate only two or three at a time.

Mr. Weinberger says a live-and-let-live philosophy largely prevails. “His property is in a row of five or six very large, very impressive houses,” he says. “And it’s just another large, impressive house on the lake.”



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