Famous hotel is for sale — while ex-owner’s on the lam
Famous hotel is for sale — while ex-owner’s on the lam
L’Ermitage in Beverly Hills will fetch at least $100 million
By Roger Vincent
Bidding has commenced in an auction of the Viceroy L’Ermitage Beverly Hills, a legendary hotel last owned by a highflying Malaysian investor now on the lam after being accused of embezzling billions of dollars from his country’s government.
The low-key boutique hotel has been known as a celebrity haunt for decades, where the likes of Elizabeth Taylor, Richard Burton and Laurence Olivier have bunked for the night and dined in its fancy French restaurant.
It will sell for at least $100 million, federal representatives said Thursday, or perhaps more at an auction set for Aug. 19.
Since it opened in 1975, the L’Ermitage has had a series of owners — most recently the U.S. government, which moved to seized it in 2016 from Malaysian financier Jho Low. Federal investigators said Low bought the hotel and other properties, including a Hollywood Hills mansion, with money embezzled from a Malaysian government-owned fund intended to spur economic development in the Southeast Asian country.
In 2012, Low turned heads when he dropped a whopping $38.98 million on his Hollywood Hills estate, redefining what a home could sell for in the celebrity-filled Bird Streets neighborhood. Federal authorities seized the property and sold it for $18.5 million in March.
Low is accused of being the mastermind of a scheme to plunder $4.5 billion from the fund known as 1Malaysia Development Berhad, money that was supposed to be used to invest in real estate, Middle East oil and other sectors.
Low has denied any wrongdoing but is a fugitive from Malaysian and U.S. authorities.
In Los Angeles, Low was known as a high roller who partied with Paris Hilton and poured $100 million into Martin Scorsese’s film “The Wolf of Wall Street.”
The L’Ermitage stands eight stories in a residential neighborhood on Burton Way and is unassuming on the outside but over-the-top plush on the inside.
A $37-million renovation completed in 2016 helped it keep the coveted five-star rating from Forbes Travel Guide it has held since 2000. Its 116 rooms are all suites, including the 3,328-square-foot presidential suite that includes five balconies, a Steinway grand piano, a formal dining room, dens and a kitchen.
The hotel has a rooftop swimming pool with views of the Hollywood Hills, a spa and a restaurant and bar called Avec Nous. The marble bathrooms have televisions inset in the mirrors. Nightly rates start around $500.
The L’Ermitage is operated by luxury hotelier Viceroy Hotels & Resorts, and the new owner will need to decide whether to continue that relationship.
Interest from potential buyers has been “extraordinary,” said Matthew Bordwin of Keen-Summit Capital Partners, who is conducting the sale on behalf of a special master appointed by the U.S. District Court for the Central District of California.
“This is a unique, special property,” Bordwin said. “We’ve had a significant number of qualified offers.”
Bordwin announced Thursday that Special Master Michael M. Eidelman had accepted a “stalking horse” bidder — an entity selected to make an initial bid — who set the floor for future bidders at $100 million. Bordwin declined to identify the bidder beyond saying it is “a savvy real estate investor with hospitality experience.”
The stalking horse bidder will purchase the hotel for $100 million if no bids come in higher at the auction next month. Higher bids must start at $104 million, said Bordwin, who will spend the next few weeks putting other potential buyers through a qualification process to prove they are able to pay what they offer.
Typically bidders would compete in a room eye to eye for such an auction, he said, but because of the COVID-19 pandemic the sale will be conducted by an online video chat limited to the participants.
Low bought the 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 depressed now, hobbled by the pandemic, which has damped travel around the world, industry analyst Alan Reay said.
Sales of hotels in California were down 90% from April 1 to the middle of June compared with the same period last year, he said, “so for all intents and purposes the sales market has come to a grinding halt.”
One of the last big luxury hotel sales in the region was the $415-million purchase in December of the Montage Beverly Hills by Maybourne Group, a London company that renamed the property the Maybourne Beverly Hills. At more than $2 million a room, the price was a California hotel sale record, Reay said.
At a similar price, the L’Ermitage would sell for more than $230 million, but with the hotel market on its knees during the pandemic it may sell for less and to someone who doesn’t even want to run a hotel, Reay said.
Many hotel buyers these days plan to convert their properties to other uses such as housing, he said. “I wouldn’t be surprised if the ultimate buyer was looking at a condo play.”
