In a curious case of crowdfunding ingenuity, investors can now own a share of the oh-so-glamorous Beverly Estate, one-time love nest of newspaper mogul William Randolph Hearst, honeymoon spot of Jackie and JFK, and famous filming location, most notably for the horse-head-in-the-bed scene from The Godfather.
Investors willing to pony up a minimum of $125,000 for a "Unit" of the house will receive a guaranteed 5 percent return on their investment, with the potential to get up to a 20 percent return. The entire campaign is being run on the Start Engine platform, and joins similar crowdfunding initiatives that promise a lower barrier to entry, as well as shared risk.
What does that mean? Basically, the owner wants to take out a loan against the lavish, 50,000,000-square-foot estate (which contains 19+ bedrooms, 40 bathrooms, a nightclub, Harry Potter-esque library, and two screening rooms). But instead of getting the money from a bank, they’ve created an LLC to crowdfund cash at 5 percent interest. A maximum of 320 investors will be allowed to invest in the deal for a total of $40 million, and the funding round will close on July 31, 2017.
According to the campaign, "An investment regarding The Beverly House should offer much more peace of mind, and enjoyment, than the turmoil, uncertainties and unpredictability in world markets and currency risks and allows much desired diversification of investments." Movies and real estate are always a sure thing.
Investors can also look forward to a discount of up to $25,000 on renting out the house for events, and they’ll be on the exclusive invite list for parties held at the estate "at which one or more entertainers, athletes, astronauts, or dignitaries may be present." Shareholders who buy eight or more units of the LLC might even be able to hang around the house when a movie is being filmed. But the fine print give no guarantees.
The sprawling Mediterranean-style home was designed by Hoover Dam architect Gordon Kaufmann in 1927 for banking executive Milton Getz. In 1946, publishing baron William Randolph Hearst—whose life inspired Orson Welles’ Citizen Kane—purchased the home for his long-time lover, the actress Marion Davies, and christened it Beverly House. Hearst actually died in the home in 1951.
The Kennedys honeymooned at Beverly House in 1953 and it eventually became the west coast HQ for JFK’s presidential campaign. It has also been used for many film shoots over the years, making appearances in The Jerk, The Bodyguard, and The Godfather. Rihanna even rented the estate for a lavish birthday bash.
The home, which garners record-breaking rents in excess of $600,000 a month, was put on the market in 2014 for a whopping $135 million, but didn’t sell. Looks like the estate’s owner, financier Leonard Ross, is now turning to alternative means of sale. Ross declared bankruptcy in 2010 while owing $40 million in debt on the property, precisely the target amount of the estate’s crowdfunding campaign.
According to the campaign, the 6.25-acre Beverly House estate is currently valued at $160 million, though it "may now, or soon, be listed for sale at either $175,000,000 by itself, or $195,000,000 with the adjacent property." If the property finds a buyer at that price, Beverly House will be one of the most expensive homes ever sold in the United States. And investors in the crowdfunding campaign will make a pretty penny.
Source: Start Engine campaign