In the foothills of Bel-Air rises “Billionaire,” the aptly named 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 region 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, an infinity pool with a swim-up bar (one of five) and a four-lane bowling alley.
It also has a mortgage to match.
The new owner — whose identity is hidden behind a limited liability corporation — paid $94 million for the house in October, a generous discount from the $250-million original asking price.
The buyer 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 in a document as a second home.
It turns out that the super-rich sometimes buy houses like normal people, although everything is on a much larger scale. When they 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 Beyoncé 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 Beyoncé, you could probably borrow money [at an annual rate] 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 [to purchase the house] 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.
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.
Still, Neumann walked away with a $1.6-billion exit package, so he’s unlikely to mount a fire sale.
Then there’s Tesla CEO 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 to the Bloomberg Billionaires Index, Musk testified in court recently that he’s cash poor.
There were more than 230 active “super jumbo” mortgages — loans of $10 million or more — in the U.S. at the end of 2018, according to CoreLogic. Three-quarters were originated since 2013, the property data provider said.
Although the fortunes of billionaires such as Musk and Neumann are relatively illiquid, that’s not an issue for many of the uber-wealthy. Some of 2019’s biggest purchases didn’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 billionaire real estate developer Charles Cohen, who is listed as president of WinterSun Properties. Elliott declined to comment on who the buyer is.
Cohen, who is also chief commercial officer at SkyPower Global, didn’t respond to calls requesting comment. An HSBC spokeswoman declined to comment.
Alexander and Maloney write for Bloomberg.