Do I hear $90M? Fortress now wants to auction Hearst estate
Creditor tells judge an auction could clear $80M in secured debts
Fortress Investment Group hopes to extricate itself from the William Randolph Hearst estate by auctioning off the property.
The SoftBank-owned, New York City-based finance giant is the chief creditor in the bankruptcy proceeding of the estate’s owner, TBH19 LLC, an entity created by litigator Leonard Ross, who bought the estate at 1011 N. Beverly Drive in 1976.
Fortress affiliate DBD Credit Funding called to seize the 29,000-square-foot mansion in a plan of reorganization filed last week with federal bankruptcy Judge Vincent Zurzolo.
A hearing on the bankruptcy is scheduled for Tuesday, but it is not certain if Zurzolo will rule on Fortress’s reorganization plan.
Ron Green, a veteran Los Angeles-based real estate appraiser hired by Fortress, valued the property at $90 million.
A sale of $90 million would allow Ross’s LLC — which has $311 million in liabilities, according to court records — to pay off the $80 million it owes to secured claimants, including $49 million to Fortress.
The home is currently on the market, with a listed price of $125 million. However, Fortress wants to put up the property for auction. They’ve requested to hold an October auction in the downtown L.A. offices of law firm Sidley Austin, which is representing Fortress in the bankruptcy.
“The debtor has repeatedly refinanced the property since its acquisition in 1976, pulling out equity to maintain the property and finance the lifestyle of Ross,” reads the plan of reorganization.
However, an auction is an unorthodox strategy for luxury real estate, a field that brokers stress is based upon developing a relationship with the buyer. A recent attempt by developer Stuart Rubin to offload his Beverly Hills home via auction backfired, and the broker Joyce Rey later shopped it off-market on her Instagram account.
Unclear is how serious Ross has been in shopping the mansion, famous for being the site of John and Jaqueline Kennedy’s honeymoon and a scene in “The Godfather.”
The lawyer has put the home on the market multiple times — the earliest in 1987 — and he most recently listed in February. However, Ross claimed in his successful small business loan application he hopes to continue using the property to generate leasing income.
Mauricio Umansky and Santiago Arana of The Agency are Ross’s listed sales agents. Messages left with them went unreturned.