Breaking up a billionaire’s property empire

John Paulson case shows the real estate stakes in a master of the universe’s split

John Paulson, Jenica Paulson (left) and Alina De Almeida (right) with various properties owned by John Paulson (Getty; Google Maps; Illustration by Kevin Rebong)
John Paulson, Jenica Paulson (left) and Alina De Almeida (right) with various properties owned by John Paulson (Getty; Google Maps; Illustration by Kevin Rebong)

Billionaire hedge funder John Paulson may have given away $100 million to put his name on New York University’s newest building, but that’s peanuts compared to what he could soon part with.

John and Jenica Paulson (Getty)

John and Jenica Paulson (Getty)

Paulson and his wife, Jenica, are locked in a bitter divorce that will divvy up, among other things, a real estate portfolio worth hundreds of millions of dollars. Paulson, who made his fortune betting against subprime mortgage bonds before the Great Recession, is worth $4.8 billion, according to the Bloomberg Billionaires Index. King Solomon made it work with a baby, but dividing a baby is child’s play compared to a billionaire’s property portfolio.

A home for every season

When a couple gets divorced, real estate tends to be one of the most complicated holdings to mete out — no matter the net worth at stake. Home equity is the single largest contributor to household wealth, and that value is highly vulnerable to changes in market conditions. Splitting up real estate is psychologically tricky, too — the home is the backdrop for countless family memories.

Perhaps the couple even has a vacation home. In the case of John and Jenny Paulson, there’s a townhouse, an Aspen ranch and Puerto Rico pads, at least.

John and Jenny Paulson's Palm Beach mansion (Google Maps)

John and Jenny Paulson’s Palm Beach mansion (Google Maps)

Their biggest buy appears to be a $110 million Palm Beach mansion on 2.6 acres near the Intracoastal Waterway and Atlantic Ocean. The home has become a sticking point in the divorce, according to Page Six, which alleges that the couple do not have a prenup.

Hala Ranch in Aspen (Facebook)

When the Paulsons preferred colder climes, they could decamp to the Hala Ranch in Aspen, a 56,000-square-foot mansion once marketed as the most expensive single-family property for sale in the country. The couple purchased it from Saudi Prince Bandar bin Sultan for $49 million in 2012. Then there’s the $41 million home on Lake Agawan in Southampton, the $14.7 million Upper East Side townhouse and the Olympic Tower condo on Fifth Avenue.

From left: The Paulsons' home in Southampton, their Upper East Side townhouse and the Olympic Tower (Sotheby’s International Realty, Google Maps, Olympic Tower)

From left: The Paulsons’ home in Southampton, their Upper East Side townhouse and the Olympic Tower (Sotheby’s International Realty, Google Maps, Olympic Tower)

Paulson recently sold his townhouse near the Frick Museum for $5 million, a $23 million discount from its initial asking price.

Dividing up property in a typical divorce requires a scalpel. For multi-billionaires, it requires a treasure map.

“In those cases, we’ve always divided up the residences they really care about and gotten rid of the ones they don’t,” said Eleanor Alter, a top New York divorce attorney with decades of experience handling high-net-worth splits. “It’s really an emotional issue, not a financial issue.”

John Paulson and Alina De Almeida (Getty)

There’s reason to believe the two will fight it out. Jenny Paulson reportedly found out John had filed for divorce by reading about it in Page Six, and sources told the gossip column last year that Paulson, then 65, was already living with a 33-year-old girlfriend in his swanky Olympic Tower apartment.

Jenny recently filed a suit against Paulson accusing him of hiding billions of dollars in assets. Paulson denies the claim, arguing that Jenny signed the couple’s joint tax returns, which included the trust she claims he used to shield the assets.

Both John and Jenny Paulson have retained top-tier attorneys with experience handling complicated real estate portfolios. John is repped by William Zabel, whose past clients include Related Companies founder Steve Ross and hedge funder Bill Ackman. Jenny hired Robert Cohen, who represented Melinda Gates, Ivana Trump and former New York City Mayor Mike Bloomberg in their divorces. Cohen’s firm was described by one attorney in an annual ranking as “the firm you would go to when you want to send a message that you mean business and you are out for blood.”

Attorneys for John and Jenica did not immediately respond to requests for comment.

The delicate dance

John and Jenny wed in 2000 in Southampton, the same town where John pulled off one of his first major real estate coups, according to “The Greatest Trade Ever,” a book about Paulson by journalist Gregory Zuckerman.

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In 1994, as Paulson was grinding to find investors for his new hedge fund, he heard about a home in Southampton owned by a couple that was, fittingly, in the midst of a divorce. He reached out to the wife, who agreed to sell him the house for $425,000. The sale fell through and the property went into foreclosure.

On a rainy August morning on the steps of the Southampton Courthouse, Paulson outbid GE Capital for the property, but not by much: He scored the beachside mansion for just $235,000, barely more than half of what he’d planned to pay. Later that year, he bought a Soho loft — soon to become his bachelor pad — out of foreclosure.

The loft parties grew old by the late ‘90s, and Paulson decided it was time to settle down. Jenny, whom he had met during his days at Bear Stearns, was working as his secretary and checked all the boxes. Paulson was already wealthy, but nowhere near the level he would become during the marriage, a fact that greatly complicates the divorce.

Paulson’s windfall came in 2007, when his firm Paulson & Co. made $15 billion on the housing crash. His personal cut came to nearly $4 billion, and he took home another $2 billion from similar moves in 2008 and early 2009.

Uncertainty in the housing market makes it much harder to tell how much the Paulsons could get for their extra homes, or whether they will sell them at all. It can be difficult to assess the value of any property in this environment, especially one in a stratosphere at which the difference between $55 million and $59 million can be an appraiser’s mood on a given day.

“I have cases where I’ve had three appraisals done,” said Caroline Krauss, another leading matrimonial attorney specializing in high-net-worth clientele. “We have an appraisal, then we update it, then we update it again. Wildly differing values. It’s just so arbitrary.”

Another of Krauss’ clients owned a $9 million apartment, but his wife “dragged her feet” as interest rates rose.

“We totally missed the market, and the apartment is now languishing,” Krauss said. “Just waiting an extra month has a huge impact on some of these people.”

With interest rate hikes still on the table, some high-net-worth couples are agreeing to co-own properties until things settle down. “It’s happening now a little more easily because people think that apartments will go up in value once we get beyond the current crises, assuming we do,” Alter said.

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Another unlikely but not impossible option is to continue to share a property, switching off stays.

“In my experience, [co-use] is an unmitigated disaster,” Alter said. It works for a bit, but once one person starts dating again, and she finds a hair clip or he finds birth control pills, everything falls apart.

The Paulsons will also have to handle their commercial real estate holdings. When Marriott bought Starwood Hotels and Resorts in 2015, Paulson & Co. was Starwood’s largest shareholder. It is unclear how much of that stock, if any, Paulson still controls. The investor also holds stakes in Puerto Rican hotels, including at least the Condado Vanderbilt Hotel, St. Regis Bahia Beach Resort and La Concha Renaissance.

Condado Vanderbilt

Condado Vanderbilt

The Wall Street Journal reported in 2021 that Paulson was looking to sell the Condado Vanderbilt and La Concha, which he had purchased in 2014 for $260 million. Brokers told the outlet the hotels could fetch upwards of $500 million.

Paulson has been bullish on Puerto Rican real estate in general, telling the Puerto Rico Investment Summit in 2016 that his investments on the island were personal, not through his hedge fund (although the fund has since been converted into a family office). He also told the conference he built a vacation home and bought an apartment on the island, comparing its real estate potential to Miami properties in the 1980s. “There was a lot of real estate on the beach, lots of abandoned buildings and vacant lots. That was definitely the best time to buy,” Paulson said at the time.

Federal filings show that as of the third quarter, Paulson & Co. was heavily invested in gold and mining, along with some investments in software and energy. The firm also owns nearly 1.3 million shares of Newmark Group, currently worth about $10.4 million. That adds up to less than 1 percent of the family office’s holdings.

Commercial real estate is typically easier to divide up and “not usually as bitter as personal real estate,” Alter said.

All this just for the real estate — there’s still children, investments, art and jewelry.

“If people are reasonable, they can do it,” Alter said. “But if they’re determined to fight over everything, then real estate is a great thing to fight over.”