The bidding has begun at the auction of Viceroy L’Ermitage Beverly Hills, a legendary hotel last owned by a high Malaysian investor now in the middle of the lam after being accused of embezzling billions of dollars from his country’s government.
This low-end boutique hotel has been known as a celebrity residence for decades, where people like Elizabeth Taylor, Richard Burton, and Laurence Olivier sleep at night and eat at fancy French restaurants.
It will sell for at least $ 100 million, federal representatives say Thursday, or maybe more at an auction set for August 19.
Since opening in 1975, L’Ermitage has had a series of owners – most recently the U.S. government, who moved to take it in 2016 from Malaysian financier Jho Low. Federal investigators say Low bought hotels and other properties, including Hollywood Hills mansions, with embezzled money from Malaysian government funds intended to spur economic development in the Southeast Asian nation.
In 2012, Low turned around when he dropped $ 38.98 million on his Hollywood Hills plantation, redefining what a house can sell in a celebrity-filled Bird Streets neighborhood. Federal authorities confiscated the property and sold it for $ 18.5 million in March.
Low was accused of being the mastermind behind the scheme to plunder $ 4.5 billion from a fund known as 1Malaysia Development Berhad, money that should have been used to invest in real estate, Middle Eastern oil and other sectors. Low has denied any wrongdoing but is on the run from Malaysian and US authorities.
In Los Angeles, Low is known as a high roller partying with Paris Hilton and pouring $ 100 million into Martin Scorsese’s film “The Wolf of Wall Street.”
The L’Emitage stands eight floors in a residential neighborhood on the Burton Way and is modest on the outside but luxurious on the inside.
The $ 37 million renovation completed in 2016 helped maintain the coveted five-star rating of the Forbes Travel Guide that has been held since 2000. 116 rooms are all suites, including a 3,328 square foot presidential suite that includes five balconies, a Steinway grand piano, dining room formal, nest and kitchen.
The hotel has a rooftop swimming pool with views of Hollywood Hills, a spa, and a restaurant and bar called Avec Nous. The marble bathroom has a television inset in the mirror. Nightly rates start at around $ 500.
L’Ermitage is operated by luxury hotelier Viceroy Hotels & Resorts, and the new owner needs to decide whether to continue the relationship.
The interest of potential buyers is “extraordinary,” said Matthew Bordwin of Keen-Summit Capital Partners, who conducts sales on behalf of special masters appointed by the U.S. District Court. for the Central District of California.
“This is a unique and special property,” Bordwin said. “We have a large number of qualified offers.”
Bordwin announced on Thursday that Special Master Michael M. Eidelman had accepted the “stalking horse” bidder – an entity chosen to submit an initial bid – which set the number of future bidders to be $ 100 million. Bordwin declined to identify the bidder outside saying it was “a smart real estate investor with a hospitality experience.”
The stalker bidder will buy the hotel for $ 100 million if there is no higher bid at the auction next month. A higher bid must start at $ 104 million, said Bordwin, who will spend the next few weeks putting other potential buyers through the qualification process to prove they can afford what they have to offer.
Usually bidders will compete in a face-to-face room for such auctions, he said, but because of the COVID-19 pandemic the sale will be done by online video chat being limited to participants.
Low bought a hotel for $ 46 million in 2010, when the market was still depressed after the Great Recession. The previous owner paid $ 68 million in 2000.
The hotel market is under pressure now, hobbled by a pandemic, which has dampened travel around the world, industry analyst Alan Reay said. Hotel sales in California fell 90% from April 1 to mid-June compared with the same period last year, he said, “so for all intents and purposes, the market has stopped selling completely.”
One of the last large luxury hotel sales in the region was a $ 415 million purchase at Montage Beverly Hills in December by Maybourne Group, a London company that was renamed Maybourne Beverly Hills. At a price of more than $ 2 million per room, the price is a record for California hotel sales, Reay said.
At the same price, L’Ermitage will sell more than $ 230 million, but with the knees of the hotel market during the pandemic, it may be sold at a cheaper price and to someone who doesn’t even want to run the hotel, Reay said.
Many hotel buyers today plan to convert their property to other uses such as housing, he said. “I would not be surprised if a major buyer sees a condo.”
