LOS ANGELES (Reuters) - It has 17 bathrooms, a 17-car garage, marbled floors, gold leaf ceilings, a vineyard, horse stables, tennis courts and a lake - and occupies the largest parcel of residential real estate on southern California’s exclusive Newport Coast.
This empty, never-sold, soon-to-be-auctioned mega-mansion is a gaudy symbol of the runaway extravagance that gripped the top end of the U.S. real estate market before the housing crash of 2008. Once valued at $87 million, it could be sold for a quarter of that price at an auction next week.
And One Pelican Hill Road North, once known as Villa del Lago, is also a story of housing bubble hubris, embodying the rise and fall of a man who once ruled luxury real estate in one of the world’s most expensive housing markets.
The project began in 2003, when John McMonigle, a top luxury property broker in Orange County, south of Los Angeles, put together a partnership to acquire a 12.5 acre lot for $3.42 million, according to agents at HOM Sotheby’s International Realty now in charge of marketing the property.
The seller was the Irvine Company, which over the course of a half-a-century has converted a family cattle ranch into one of the nation’s great real property empires.
McMonigle, a handsome, well-tailored man who once claimed an astonishing $2 billion in property sales over a 5-year period, soon unveiled an artist’s rendering of what was to be one of the world’s premiere mansions.
This stretch of U.S. coastline, between Los Angeles and San Diego, is one of the world’s prime real estate locations.
Hollywood celebrities and other super-rich stars have long owned property in nearby Newport Beach, including actors John Wayne and Shirley Temple. The golfer Tiger Woods owned a property there.
Shortly after buying the land the McMonigle partnership secured a construction loan from La Jolla Bank, and work began on the Tuscan-style villa in 2004. McMonigle, riding the property boom, was by this time living in a mansion of his own, owned a yacht, and had achieved enough celebrity to appear on the Oprah Winfrey show.
Then the crash came. In 2010 La Jolla Bank went under, and was taken over by OneWest. In October 2010, OneWest cut off funding for the $22 million loan, with the 17,500-square-foot, three-story villa about 90 percent complete, according to interviews McMonigle gave at the time.
By January 2011, the property was in default. McMonigle told the Orange County Register newspaper at the time that he stopped making the monthly loan payments in retaliation for the bank’s breach of the loan agreement.
In April 2011, McMonigle filed for Chapter 7 personal bankruptcy, and quit the Pelican Hill Road partnership. In June 2011, the partnership filed for Chapter 11 bankruptcy, a move that automatically stopped a foreclosure sale.
Now the property is set for auction on April 26, with OneWest hoping it can recover its loan plus interest and fees.
Rob Giem, the agent in charge of selling the property, said dozens of potential buyers had registered bidders for the auction. Over 700 people attended a recent open house.
“I’m confident we’ll sell it,” Giem said. “A lot of people have been lurking in the shadows watching this property.”
But what price it might command seems to be anybody’s guess.
“The house is spectacular. It’s unique,” said Michael Gosselin, a veteran Newport Beach estate agent. “For the right buyer, it would be fantastic. I just don’t know how many buyers like this are out there anymore. I’ll be curious to see what it sells for.”
McMonigle’s financial woes were not his only troubles last year. His wife of 16 years filed for divorce a week before he filed bankruptcy. Court documents list his liabilities at nearly $50 million, with assets of $2.36 million. More than 200 creditors are owed money.
McMonigle is now an agent with Teles Properties, based in Newport Beach, where he moved after his bankruptcy with several colleagues from his former firm, The McMonigle Group.
“Any discussion of high-profile, ultra-luxury residential real estate would be incomplete without mentioning John McMonigle and his talented team,” the website reads.
There is no mention of the bankruptcy or the court-ordered auction of the estate. Contacted by Reuters, McMonigle said: “I am not in a position to comment.”
Reporting By Tim Reid; Editing By Jonathan Weber