It is one of the great what-might-bes of Los Angeles real estate. A 157-acre mountaintop property once envisioned as a mansion-in-the-sky for the Shah of Iran’s family remains unbuilt and unbought.
After an earth-moving project three decades ago created 15 acres of flat land, a procession of global billionaires, Hollywood royalty and actual royalty have made the half-mile drive uphill to take in the panoramic ocean and city views.
Nothing has come of those efforts. The reasons why vary, but one thing seems clear: the current owners of 1652 Tower Grove Drive in Beverly Hills Post Office keep shooting for the moon — and shooting themselves in the foot.
Thorny legal battles set off by the sudden death of an owner, broken deals, exorbitant price tags — not to mention the sheer patience that would be required to build anything there — have kept the property, currently dubbed “The Mountain of Beverly Hills,” from joining the ranks of the swankiest addresses in L.A.
For years, the owners have sought to create a mythology around the property, touting that it was “nearly twice the size of Disneyland.” In reality, however, the Mountain’s nearly 25 acres of usable land today is closer to the size of 19 football fields.
The owners also stressed, court records show, that the property was worth “not less than $500 million.” But that didn’t stop Aaron Kirman, a star agent at Pacific Union (now Compass), from listing the property for $1 billion three months ago. That sticker price set a new record for an L.A. listing but drew snickers from Kirman’s competitors, who see it as a PR stunt.
“Having the most expensive property that exists is great publicity” for Kirman, said Stephen Shapiro, co-founder of the Westside Estate Agency. “My guess is it will be a long time before he makes a dollar out of it.”
Setting the records straight
The biggest closed residential sale in the U.S. is $147 million for an 18-acre Hamptons estate in 2014. Hedge fund titan Ken Griffin is reportedly paying north of $200 million for a penthouse at 220 Central Park South in New York, while embattled Saudi Crown Prince Mohammed bin Salman holds the record for the priciest closed sale worldwide, paying $301 million for the Chateau Louis XIV outside Paris.
In L.A., the record closed sale came this April, when energy billionaire Michael S. Smith agreed to pay $110 million for a home on Malibu’s Carbon Beach. That deal eclipsed the $100 million Twinkie heir Daren Metropoulos paid for the Playboy Mansion.
But all of those trades featured spectacular residences of one type or another. The most anyone has paid in L.A. for a chunk of dirt is $50 million.
Flat-acre lots in nearby Beverly Park, which some agents say are comps for The Mountain — albeit without the views — are worth $20 million to $25 million. Then there is the 120-acre parcel of land in Beverly Hills that a trust linked to the late Microsoft co-founder Paul Allen hopes to sell for $150 million.
Kirman did not respond to requests for comment. But his boss, Mark McLaughlin, who oversees Pacific Union’s operation for Compass, defended the pricing.
“If it’s a marketing stunt, it worked,” McLaughlin said in an interview last month. “It’s gotten an incredible amount of attention…someone that wants a premier property in all of Beverly Hills is probably going to pay something close to it.”
Kirman received at least one offer on the property, which the owners, an entity controlled by the Noval family, turned down, McLaughlin said. He declined to give specifics on the offer.
In 2015, Victorino “Victor” Noval, the father of Franco Noval, who manages the current ownership entity, Secured Capital Partners LLC, floated the $1 billion price tag on blogs and social media, against the advice of his longtime agent, Jeff Hyland, the president of Hilton & Hyland. That September, a critical look by the Hollywood Reporter at the property’s history and at the elder Noval, who served time in prison for mortgage fraud, soon popped that trial balloon.
Two weeks after the article ran, Victor Noval claimed the $1 billion price tag was “simply untrue” and that the ownership of the property was not in dispute. He said there were no plans to sell the property, and that the owners would instead use it as a “special events site” to “benefit the community and charitable organizations.”
That plan shifted three years later, however, when Franco Noval’s entity officially listed the Mountain at $1 billion, with pricing “based on broker recommendation,” said Ronald Richards, a lawyer for Secured Capital Partners.
Prominent brokers said the property was worth between $100 million and $300 million. Shapiro, of Westside, said it was wildly overpriced, but given their spectacular views the six lots could fetch up to $50 million each, or $300 million in total.
Hyland said he declined to list the property at $1 billion.
“I could not risk my company’s credibility nor my partner’s by putting it out at $1 billion,” he said, adding that he had been willing to list it for $500 million.
After representing the property on and off for nearly two decades, Hyland said his firm has an exclusive listing agreement in place that guarantees a 5 percent commission.
“I am thrilled that Compass is going to do all the legwork,” Hyland said, adding that his brokerage is “pursuing its legal remedies.”
McLaughlin declined to comment on Hilton & Hyland’s listing agreement. Richards said he could not comment on it either, because it was with a different entity than the current owner. That entity, Tower Park Properties, is controlled by Victorino Noval and Charles “Chip” Dickens, an Atlanta investor who bought the property in a no-money-down deal in 2004 for $23.75 million.
A review of two listing agreements from 2011 showed that Tower Park Properties “and/or its assignees” had given Hilton & Hyland the exclusive right to sell the property, with the relevant agreed term being two years from receipt of certificate of completion of a main residence.
Dickens declined to comment. The elder Noval, whose LA Stars entity holds a 40 percent ownership interest in Tower Park Properties, did not respond to requests for comment.
Merv and the mountain
Steve Lewis had been in the real estate game “for 10 minutes” when he thought of pitching the mountaintop property to his best friend’s father — Merv Griffin. It was 1986, and Lewis – then a 20-something struggling actor who now runs his own Beverly Hills-based brokerage, CORE Real Estate Group — had already sold one property to Griffin for $5 million.
Shams Pahlavi, the elder sister of Iran’s last shah, Mohammad Reza Pahlavi, had purchased the land in the late 1970s, and had plans in place in the 1980s to build a decadent estate for the deposed shah and his family, Lewis said.
On a cool, clear morning, Lewis drove Griffin to the top of Tower Grove Drive. Shortly after the tour, Griffin told the agent he wanted to buy the land, Lewis said.
Entitling the property proved to be a challenge. Lewis spent months doing the rounds of various city departments. He was “dead in the water” with a seemingly insurmountable demand by the fire department to provide another way in and out of the property, when he hired Gary Morris, an experienced local developer, who successfully negotiated the last hurdle with the city.
Once the site was entitled, Lewis closed the sale to Griffin within a week. Giant earth-grading tractors with seven-foot tires then moved about 1 million cubic yards of earth off the top of the mountain. On the last day of the grading operation a 21-year-old worker died when his scraper tumbled 400 feet off the side of the cliff.
The finished project was a site with about 15 flat acres fit for the 58,000-square-foot mansion that Griffin planned to build. Much of the rest of the property was steeply sloped — “billy goat land,” as Brian Adler, the co-developer of Beverly Park, put it. Morris negotiated with the city for the right to build six homes on the property, agreeing to designate a chunk of it for the Santa Monica Mountains Conservancy.
In all, Griffin spent $5 million for the property in 1987, and another $3 million on the grading effort. About a year later, however, the entertainer’s attentions turned to developing a separate hotel property, and he put the Mountain back on the market.
Lewis spent the better part of the next decade scouring for a buyer. He shopped the property as high as $25 million, for all 157 acres.
Around 1990, a group of Saudis went into escrow for about $20 million, Lewis said, but pulled out.
“My clients wanted to get 10 lots out of the 157 acres, and the city said you can only have six,” said Joyce Rey, the Coldwell Banker agent who represented the Saudis.
There were also a series of Hollywood courtships. Steven Spielberg toured at least three times. “He spent hours up there walking around,” Lewis said, but lost interest in the midst of his divorce to actress Amy Irving.
Film producers Mario Kassar and Andrew Vajna wanted to build two homes on the mountain. They went into escrow in 1989 at $20 million, but pulled out on day 30 when Jose Menendez — who worked with Vajna at his production company — was shot to death along with his wife.
“This was a high-profile purchase and they felt vulnerable that a crazy killer could be out there,” Lewis said. (It was later determined that Lyle and Erik Menendez, “the Menendez brothers,” had murdered their parents.)
Despite its panoramic views, the Mountain turned off some buyers.
“People hated the location in that they didn’t like driving up this long road to get there,” Lewis said. “And they had to consider how long it would take to build a home there.”
In 1997, Mark Hughes, the founder of Herbalife, bought the land for $8.5 million. Three years later, with plans to construct a mega-estate well underway, he died at 44 of an accidental overdose.
Hughes’ death set off an ownership struggle that continues. A group of trustees, including Conrad Klein, a lawyer for Hughes, wanted to develop the project as Hughes had intended. They clashed with Suzan Hughes, the Herbalife founder’s third ex-wife and mother of his sole heir, Alexander Hughes. Left out of the will, Suzan objected to using funds from his trust to develop the property and wanted to sell it as soon as possible, court documents show.
Hilton & Hyland got the listing. In October 2000, they listed it for $29 million on the Multiple Listing Service, where it lingered for nearly three years.
The agents then tried peddling it off-market. Hyland said they wanted to wait for the Hughes estate lawsuits to be resolved before doing “an international outreach.”
In 2003, Adler and Morris made a presentation to Suzan Hughes and the board about forming a joint venture to develop the property into Beverly Park West. She “flatly said no,” Adler recalled.
Several months later, the estate sold the property to Dickens, the Atlanta investor, agreeing to lend him money from the trust as long as he developed the property.
The new owners hired Morris for a second grading operation. By 2008, he had divided the lots that made up the original 15-acre plot into six plots of two to five acres each, expanding the overall useable land to between 20 and 25 acres. He also installed a private street up the middle and put in water and utilities.
“We spent over $1 million just to get the water up there,” Morris said.
Morris also installed areas for gardens and vineyards. Hyland renamed the property “The Vineyard” and winemaking became part of the marketing pitch, with a Napa vintner even printing preliminary wine-bottle labels.
Earlier media reports stating that the property came with permission to build 1.5 million square feet of living space across multiple buildings were grossly overstated, according to Morris.
“That is just nonsense,” he said. Each lot, he said, could have a main house and accessory structures of 17,500 square feet without a site plan review. With further entitlements, owners could get up to 50,000 square feet, including a basement — for a total of 300,000 square feet of residential floor area on the entire property.
“That is the best you are ever going to get,” Morris said. “And that is not guaranteed.”
Richards, the attorney, did not acknowledge any inaccuracy in previous reports, saying only that “there is always a range of opinions when it concerns what is buildable.”
It was Lot 6, the highest of the bunch with a sloped toboggan-run like feature, that attracted Tom Cruise. In a 2007 off-market deal, the movie star, Australian billionaire James Packer and a third investor were set to buy four lots for just over $80 million. Cruise wanted Lot 6 for an estate and Lot 5 for a soccer field. He went into escrow on Lot 6 for $25 million. When Cruise backed out due to complications with filming “Valkyrie” in Germany, the other two investors also decided to pass, Hyland said.
Since the Cruise deal, the owners’ expectations about the property’s market value have ballooned. Hyland said that in 2014 he took an American entrepreneur around the property who promptly offered $210 million — $35 million per pad — and the owners turned it down.
About six months ago, the elder Noval went to Hyland with the idea to rebrand the property as The Mountain of Beverly Hills, and to list it for $1 billion. Hyland advised against it.
The owners did it anyway, using Kirman, who made headlines last year when he sold the palatial Danny Thomas estate in Beverly Hills for $65 million — less than half the original asking price of $135 million.
Kirman plans to spend up to $1 million on marketing, including jetting around the world wooing Russian billionaires and Middle Eastern royals, the Los Angeles Times reported. His marketing director, Andy Butler, said in early August that Kirman’s team also planned a “Hollywood-style video” for the property. It hasn’t happened yet.
While Kirman is buyer hunting, two legal fights continue to simmer.
Tower Park Properties is suing the Hughes trust representative for breach of contract, alleging it “sabotaged” a settlement agreement in order to try to squeeze Tower Park into defaulting on its loans so it would have to give up the property.
That alleged effort was largely successful. With little money of its own, Tower Park borrowed millions of dollars from trust-controlled lenders to develop the property. It filed for bankruptcy protection in 2008. Tower Park is seeking damages of “not less than the fair market value of the property,” which it says is no less than $500 million.
In 2013, the parties agreed to settle the debt for $57.5 million — a heavy discount from the more than $80 million that was owed. But upon learning of the privately mediated agreement, Alexander Hughes sued to disavow it and refused to accept the agreed payoff, setting off five more years of legal challenges.
Tower Park transferred ownership of The Mountain in 2016 to Secured Capital Partners — which is to say, it kept it in the Noval family.
In a separate court action, the parties are still bickering over the total debt on the property. The Hughes trust claims that with accrued interest the debt has ballooned to more than $130 million, according to one person familiar with the matter. Lawyers for the Hughes trust did not respond to requests for comment.
Richards said that whatever the court decides, the debt is “hundreds of millions of dollars less than the current market value.” The property, he said, will be sold “free and clear of all liens with a gold standard sellers policy.”
Steeped in mystery
In addition, the Mountain continues to bleed about $1 million per year in property taxes, insurance, and upkeep, according to tax records and a person familiar with the property.
Some 30 years after first getting involved with the property, Morris, the developer, and Lewis, the original broker, are still perplexed about why no one is living up there.
“I don’t think there was a noticeable apprehension on the part of potential buyers,” Morris said. “It was a changing attitude on the part of the owners in terms of what they could sell it for.”
Lewis agreed, saying the expectations ballooned to “fantasy proportions.” But, he said, the right buyer simply may not have appeared yet.
“Mark would have seen it through,” he said of Hughes. “Plenty of people have the money. In the end it comes down to a buyer with the attention span to pursue a crazy project that will take many years to finish.”
Natalie Hoberman contributed reporting.
Source: The Real Deal Los Angeles