Prized Property Listed for $1B Sells for $100K in Auction

October 9, 2019 | Comments Off on Prized Property Listed for $1B Sells for $100K in Auction

The once-priciest property in the U.S., listed for $1 billion, has sold for a fraction of its original list price for $100,000 at a foreclosure auction this week. The $100,000 sale falls extremely short of the $200 million loan outstanding on the property, too.

“The Mountain” in Beverly Hills has long been known as one of the last prized undeveloped parcels of land in the Los Angeles area. At 157 acres, the mountaintop property is located at the highest point in the 90210 ZIP code.

But with a 99.99% markdown, the property sale comes with a lot of fine print, the Los Angeles Times reports.

The sole bid at the auction came from the Mark Hughes Trust, the estate of the late Herbalife founder, who previously owned the property. But in 2004, the Hughes estate sold the property to Atlanta investor Chip Dickens, which set off a complicated, intertwined story of how the property ended up at a foreclosure auction in the first place.

To purchase the property, Dickens borrowed about $45 million from the Hughes estate. The debt eventually surged to about $200 million, including interest and fees. Dickens then transferred ownership of the parcel to a limited liability company. That LLC was controlled by his partner on the project, Victor Franco Noval, who is the son of convicted felon Victorino Noval.

The LLC—Secured Capital Partners—failed to successfully declare Chapter 11 bankruptcy last month. That has ultimately forced the Hughes estate to sell the property at a foreclosure auction to try to recoup the losses or buy the property back. By repurchasing it, they would lose the $200 million they were owed in the process, however.

Any other buyer who bid at the auction would have been on the hook to pay the $200 million outstanding debt. No one else did. So after 15 years, the parcel of property returned to the Hughes family.

“This is the largest non-judicial foreclosure sale and the largest loss from a lender I’ve seen in 27 years,” says Ronald Richards, the attorney for Secured Capital. Secured Capital did make a last-minute offer prior to the auction for $150 million, but Richards says their proposal was ignored. “My $150 million offer was legit, and now they have a catastrophic loss,” he says.

Source:
Once Listed for $1 Billion. Sold for $100,000. What Just Happened?” The Los Angeles Times (Aug. 20, 2019)

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