A month ago, Lake Tahoe was choking on smoke. The Caldor Fire had ignited east of Sacramento, only to explode in ferocity as it roared north through the Sierra Nevadas, crossing highways and engulfing country cottages. Thousands of Lake Tahoe residents and tourists evacuated, leaving streets eerily deserted, while some ski resorts even flipped on snow machines to use as improvised water cannons.
None of it deterred Larry Ellison. Just as the famed vacation area was transforming into a fiery hellscape, the Oracle co-founder, one of the world’s richest people, closed on a deal to buy a waterfront Hyatt resort through his investment arm for $345 million.
That sale, recorded in the Washoe County Recorder’s Office on Sept. 3, represented a record per-room hotel sale for Lake Tahoe, Alan Reay, president of Atlas Hospitality Group, said in an email Tuesday. Atlas Hospitality wasn’t involved in the transaction.
It was a high-profile example of another pattern: wealthy investors and developers gobbling up choice properties even as they face existential threats from natural disasters and climate change.
“In 20 or 30 years, someone is going to find a solution for this,” the Miami billionaire developer Jorge Pérez infamously told a Miami Herald reporter in 2018, explaining why he hadn’t changed his coastal building approach despite persistent sea level rise. “Besides, by that time, I’ll be dead, so what does it matter?” He has since disavowed the comment, according to the Herald.
During the past decade, floods have caused more than $155 billion in property damage, according to FEMA, while another 300,000 coastal homes and commercial properties face a risk of chronic flooding by 2045, The Real Deal reported last month.
But around Miami, a town largely built on flashy real estate investment — and where climate change-driven sea level rise may have played a role in the Surfside tragedy — the wealthy keep buying. In the second half of last year, residential sales volume in South Florida hit nearly $33 billion, a 47 percent year-over-year increase. One waterfront spec mansion in Coconut Grove recently sold for a record-breaking $65 million, even as the property scored an excessively high flooding risk.
“No one has told me they’re not buying here because of sea-level rise or hurricanes,” Ron Shuffield, CEO of Berkshire Hathaway HomeServices EWM Realty, said early this year.
In Texas and much of the West, where climate change is making droughts and wildfires more intense, residential sales have also been booming. Around Los Angeles, which has had its own destructive wildfires, the wealthy are undeterred from buying in fire-prone areas, one realtor working in the foothills scarred by the 2020 Bobcat Fire recently told The Real Deal.
And around Lake Tahoe, Ellison has plenty of expensive company. The billionaire’s new 16-acre Hyatt is located in Incline Village, a neighborhood informally known as “Billionaires’ Row.” Past and present area residents include Mark Zuckerberg, David Duffield and Michael Milken.
In addition to the Hyatt Regency Lake Tahoe, Ellison — through different limited liability companies affiliated with his former charitable foundation — owns several other properties in the region. In 2017, his investment arm bought the historic Cal Neva Lodge & Casino on the lake’s north shore out of bankruptcy for almost $36 million. He and Nobu Hospitality Group have reportedly teamed up to redevelop Cal Neva into a Nobu hotel and restaurant, although that project is now on pause.
Ellison also owns a 7.6-acre compound at 1019, 1021 and 1029 Lakeshore Boulevard that contains seven residential structures, according to Washoe County records. The estate is within a 10-minute walk of the Hyatt Regency and adjacent Lone Eagle Grille and reportedly has a private beach and two private piers.
The billionaire’s plans for the Hyatt, meanwhile, are unclear. Ellison “is typically a long-term hold player,” Reay of Atlas Hospitality Group said.
The deal is a boon to the area’s financial future. “It is a very strong endorsement of the Lake Tahoe market,” Reay added, “and the long-term prospects.”
And the investors just keep coming. This week, now that the smoke in Tahoe is clearing, a Newport Beach developer bought the 113-room Tahoe Biltmore Lodge & Casino for almost $57 million.
Read more
Commercial
South Florida
South Florida real estate on climate change: ‘Que Sera, Sera’