Now that the Mountain of Beverly Hills has gone from a $1 billion sky-high listing to a $100,000 bargain basement auction sale, speculation has begun over its future.
What will happen to the 157-acre property that sold back to its lender at foreclosure?
“It’s going to get shuffled, reshuffled, maybe re-envisioned and then sold,” said Ernie Carswell, a luxury real estate broker at Douglas Elliman.
On Tuesday, The Mountain sold back to its previous owner and lender, an entity linked to the Mark Hughes Trust. The estate of the Herbalife founder was owed around $200 million from the now previous owner, Secured Capital. The trust forfeited that amount by taking back possession of the property.
It’s unclear what the Hughes family intends to do with the property, but Carswell believes they won’t “start becoming developers,” but will ultimately sell it. A lawyer representing the Hughes estate did not respond to repeated requests for comment.
L.A. brokers and industry pros have varying theories on its future, with some questioning whether anything will be built on the land anytime soon given the challenges involved with such a large piece of land and the uncertain economy.
Elliman luxury broker Josh Altman expects anyone that takes on the Mountain will have a seven- to eight-year “legacy project” on their hands.
In the late 1980s, when television icon Merv Griffin owned the property, the city ruled that up to six homes could be built on the spread. Building six “magnificent homes” on the property will likely set any developer back by nearly $500 million, Altman said. That’s still just half of what the original listing price.
“Unfortunately, we’re going to see this thing sitting for years to come until someone really wants to take on the project,” he said. “In the market we’re in right now, I think it will pay for the trust to hold it and not be rushed to sell it.”
Challenges abound for any future Mountain developer, and here’s another one.
Despite a bankruptcy court judge having approved the foreclosure auction — and despite the fact that it has taken place — Secured Capital intends to mount a legal fight to reclaim the property, according to the firm’s attorney, Ronald Richards. He said there will be two separate legal actions that challenge the $100,000 sale.
The circus-like atmosphere around the initial monster listing, along with Secured Capital’s tie to the family of convicted felon Victorino Noval and the firm’s legal battle over the property, has caused many in the industry to “not take [the listing] seriously,” said Steve Lewis, founder of Core Real Estate Group.
“It’s the greatest piece of land in the world, but what is it worth is the question,” said Lewis, whose has his own history with the Mountain. He listed the property way back when Griffin was selling it and it was called the Vineyard. The Hughes estate, he said, will likely “want to get rid of the thing.”
“Hopefully they’ll put a realistic number,” he said. “It should be self-evident now that $200 million was a number that no one wanted to step up and pay.”
One broker who has not shared his opinion on the topic is the original listing agent, star broker Aaron Kirman. Now with Compass, Kirman has not responded to requests for comment. But when the property hit the market in July 2018, Kirman told the Los Angeles Times he was confident The Mountain would sell to one of the “2,800 billionaires in the world.” He had already been in touch with five of them, he said, and had planned trips to London, Qatar, Russia and China to meet with others.
Stephen Shapiro, co-founder of Westside Estate Agency, said a likely scenario now is that the Hughes estate will sell off the Mountain as six separate lots, maybe for $30 million a piece. Still, Shapiro added, “it’s hard to sell lots right now.”
That’s evident in some of the ultra high-end land listings on the market in L.A. The estate of Microsoft co-founder Paul Allen put 120 acres in Beverly Hills on the market for $150 million last July. It hasn’t sold. Neither has a 10.6-acre spread near the Hotel Bel Air, which was rezoned into three separate lots, which hit the market in January for $150 million.
Maybe the Mountain’s legacy, brokers said, lies in the dangers of extreme overpricing.
“For a long time, we’ve had cautionary tales about overpricing properties,” Lewis said. “This could end up as the textbook definition of it.”