BloombergSophie Alexander and Tom Maloney
Jan. 8, 2020
In the foothills of Bel Air rises “Billionaire,” the aptly named Los Angeles mega-mansion that for one hot moment was the most expensive home for sale in the U.S.
Even in this age of ultra-wealth, and in a city with no shortage of expensive homes, this one is over the top: 38,000 square feet of living space, 12 bedrooms, 21 bathrooms, three kitchens, a 40-seat movie theater, infinity pool with a swim-up bar and a four-lane bowling alley.
It also has a mortgage to match. The new owner -- whose identity is hidden behind an LLC -- paid $94 million for the house in October, a generous discount from the $250 million original asking price. They took out a $58.2 million, 10-year loan from HSBC Bank USA, according to property records, which would make the monthly payment about $560,000 at prevailing rates. The mansion is listed as a second home in a document.
It turns out that the super rich sometimes buy houses like normal people, though everything is on a much larger scale. When they do borrow, banks are eager to provide credit. But even among jumbo loans this one stands out, exceeding the $53 million mortgage Goldman Sachs Group Inc. gave Beyonce and Jay Z in 2017 on their $88 million Bel Air home.
“With interest rates at historic lows, and if you’re Jay Z and Beyonce, you could probably borrow money as low as 2.5%,” said Shawn Elliott of NestSeekers International, one of the agents who helped sell “Billionaire.” “It probably makes more sense to borrow the money and invest the money they have.”
As the rich get richer and the number of firms looking to manage their money swells, the big banks stand apart with their deep balance sheets and ability to provide credit for purchases ranging from art to private jets to superyachts.
WeWork co-founder Adam Neumann borrowed tens of millions of dollars from banks including JPMorgan Chase & Co. and Morgan Stanley to buy properties across the country. He’s now looking to sell some of the units he bought in New York after the office-sharing company pulled its initial public offering and he was forced to step down as chairman and chief executive officer.
Then there’s Elon Musk, who has taken out several mega-mortgages, including $61 million from Morgan Stanley on five properties in California. Despite being worth more than $29 billion, according the Bloomberg Billionaires Index, Musk testified in court last month that he’s cash poor.
There were more than 230 active “super jumbo” mortgages in the U.S. at the end of 2018, according to Corelogic. Three quarters were originated since 2013, the property data provider said.
While the fortunes of billionaires like Musk and Neumann are relatively illiquid, that’s not an issue for many of the uber-wealthy. Some of 2019’s biggest purchases don’t involve mortgages, according to public records. They include Manhattan penthouses acquired by Ken Griffin for $240 million and Jeff Bezos for $81 million.
The deed for the Bel Air home was signed by Charles Cohen, who is listed as president of WinterSun Properties LLC. Elliott said the real buyer wishes to remain anonymous.
Cohen, who is also chief commercial officer at SkyPower Global, didn’t respond to calls requesting comment. An HSBC spokeswoman declined to comment.
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