Once slated to list with a $500 million asking price, a Bel-Air megamansion known as The One has sold for just $126 million at a no-reserve auction, according to a spokeswoman at Concierge Auctions. The buyer, who couldn’t immediately be identified, will also have to pay an auction premium, bringing their total bill to roughly $141 million.
The auction caps a roller coaster journey that has captivated the LA real-estate world for close to seven years.
The house was originally slated to hit the market in 2017, complete with a jellyfish aquarium, a “Monaco-style” casino and a 180-foot infinity pool, but was besieged by delays and cost overruns. Its developer Nile Niami, a larger-than-life character known for playboy antics and a “sex sells” approach to marketing his homes, ran afoul of lenders in the process, prompting one to file a foreclosure action on the property in June 2021.
In October 2021, Mr. Niami put the Bel-Air property into bankruptcy, a move that paused an impending foreclosure sale and gave him more time to find a buyer himself. He hired top realtors and an upscale auction company to market the house. At the time, his company pegged the fair market value of The One at around $325 million. Outstanding debts on the property totaled around $190 million at the time of the auction, according to Lawrence Perkins, a turnaround specialist who is now managing Crestlloyd, LLC, the company through which Mr. Niami and his ex-wife Yvonne Niami own the property. Mr. Niami didn’t respond to requests for comment.
Mr. Niami has said he set out to build the largest and most impressive house in the urban world, but his aspirations eventually had to be pared back. The jellyfish aquarium was nixed and a nightclub is now being repositioned as a “philanthropy wing” amid opposition from the local community. Spread over about 4 acres, the property is around 105,000 square feet with 20 bedrooms, a 30-car garage, a bowling alley, five swimming pools, a beauty salon, a gym and a host of other amenities.
The project got bogged down with construction delays and cost overruns.
The house is estimated to span about 105,000 square feet, making it one of the largest in the world.
Short documents show that construction consultants found defects at the house, including cracks in marble and leaks.
The home has a large number of pools and other water features.
The property was most recently on the market for $295 million.
Finding a buyer has been complicated due to alleged construction defects at the property, documented in court filings related to the nixed foreclosure proceedings last year.
A preliminary inspection conducted sometime between July and December of 2021 by Vertex,
a construction consulting firm, found that the property was plagued by water issues, thanks in part to a large number of pools and other water features dotted all over the property, according to a report filed in the Superior Court of the State of California by a short-appointed receiver. “The filtration systems appear to be inadequate…and, as a result, the pools need to be cleaned very frequently to keep up with the algae,” the court papers said.
Ted Bumgardner, a principal at Vertex, said his team observed that there was some kind of bio-organic growth in one area of the house, but they weren’t able to test what type of mold or other growth it might be. He had scheduled to have an industrial hygienist come out to inspect the project, but their investigations were shut down early because of the bankruptcy filing.
The consultants also found that much of the marble within the property—the house has approximately 30,000 square feet of white marble flooring—had not been properly treated. As such, there were significant cracks and staining. The stairs surrounding the main pool were badly cracked or broken off, so wooden supports had been installed to prevent further damage, the report showed.
Vertex’s preliminary findings also revealed that the house was not in compliance with its permits and approved architectural plans. Court records show that the receiver had been in discussions with representatives for the Bel-Air Association, a local homeowners association, which was considering appealing the property’s permits. The house still doesn’t have a certificate of occupancy from the city, meaning it is not legal to live there.
“That project has been nothing but disastrous for this area,” said Shawn Bayliss, executive director of the Bel-Air Association, citing massive disruptions caused by construction that’s gone on for roughly a decade and concerns over the nightclub plans. Mr. Niami didn’t respond to requests for comment.
“All problems are solvable, to some extent, but just a matter of what extent you may have to go to,” said Mr. Bumgardner, who compared walking into the home to entering an airport terminal rather than a private residence.
Mr. Perkins, who was hired to extract the most value possible from the sale, said some of those issues have since been resolved, but others will fall to the new owner. He said the property is now looking as good as it can, with a freshly mowed lawn and other “spit and polish” fixes. The property was most recently marketed by Rayni and Branden Williams of The Beverly Hills Estates, and Aaron Kirman of Compass for $295 million. Concierge Auctions handled the auction.
Before the auction, Mr. Perkins said he was hoping that the sale amount would exceed the value of the outstanding loans, but “you never really know until you know.”
He noted that opting for a no-reserve auction was a “highly debated topic” among the seller and the agents tapped to handle the sale. “I think we all came to the conclusion that the strategy we laid out is the right one,” he said.
After roughly 40 showings of the property, five bidders actively participated in the auction, with much of the action happening in the final few minutes before the gavel came down, said Chad Roffers, president of Concierge Auctions.
Rayni Williams said the buyers are local Angelenos who see the house as an investment property. She doesn’t expect that they will live there.
Ms. Williams called the journey a “whirlwind.” She and Aaron Kirman said that they had hoped to get $200 million or more, but the construction issues posed a challenge, since any buyer would have to accept the additional legwork. “Had there been a certificate of occupancy, there would have been more bidders and it would have sold for more,” Mr. Kirman said.
Mr. Roffers said a reserve price was ultimately waived because the priority was to sell the house. “Ultimately, the most important thing was to get this property sold,” he said. “Every month that goes by, the expenses stack up.” A bankruptcy court judge is set to review the sale next week and choose whether to approve it. Mr. Roffers said he fully expects the sale to be ratified. Mr. Niami and Mr. Perkins didn’t respond to requests for comment about the sale.
The property’s creditors include Hankey Capital, a firm led by Don Hankey, a California businessman known as the king of subprime car loans, and Dr. Joseph Englanoff, a medical doctor and real-estate investor. Some of the creditors are battling in court over the priority of liens on the property—to see who will get paid first from the proceeds of a sale. Neither Mr. Hankey nor Mr. Englanoff responded to requests for comment.
Mr. Niami worked in special-effects makeup and movie production before getting into the home-flipping business in the 1990s. By the early 2010s, he was building contemporary homes in some of Los Angeles’s priciest neighborhoods to great success, selling a house for $18 million to the Winklevoss twins and a Holmby Hills mansion with an underwater tunnel to rapper P. Diddy for $39 million.
However, as his projects got larger and more extravagant, debts started to pile up and Mr. Niami became embroiled in disputes with lenders, some of whom balked at his party-boy lifestyle. On his Instagram account, he posted pictures of him racing Bugatti and Pagani sports cars, ordering champagne and posing in a leopard-print sarong at the Burning Man festival in Nevada.
He tried various tactics to sell the property, including a social-media campaign in 2020 that called for about 200 Instagram influencers to market the property on their social media. If any of them found a buyer, they would get $1 million, he said at the time. In a video posted to YouTube in December 2021, Mr. Niami proposed creating a cryptocurrency backed by the house to pay off the debts. It would be known as The One Coin.
“Hopefully, there is someone out there who is going to want to walk hand-in-hand with me into the stratosphere,” he said in the video.
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