The hedge-fund manager, famous for correctly predicting the bursting of the housing bubble—and then missing a few calls—continues a real-estate spending spree; $49 million for a sprawling Aspen estate
By Lauren Schuker Blum | The Wall Street Journal – Thu, Oct 18, 2012 9:39 PM EDT
- Associated Press/Mark Lennihan - John Paulson, president of Paulson & Co., attends a meeting of the Economic Club of New York, Monday, April 11, 2011.
Hedge-fund manager John Paulson famously made nearly $4 billion in
2007 correctly betting that the housing bubble, fueled by the subprime
mortgage market, would pop.
Then the billionaire investor somewhat reversed course, arguing that the housing cycle had hit a low point. "If you don't own a home, buy one," he said in a 2010 speech at the University Club in New York. "If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home." So far, that bet has been a loser: The Wall Street tycoon lost about $3 billion personally in 2011, according to people close to the hedge-fund manager, speculating that the economy would recover faster than it did.
But through the downturn Mr. Paulson—whose net worth is estimated to be around $11 billion, according to people familiar with his situation—continued his real estate spending spree. Over the last eight years, he has spent more than $145 million on six properties, including two estates in Southampton, N.Y., two properties near Aspen, Colo., and two residences in Manhattan, where he is based, according to public records. (He later sold one of the Southampton properties, for $10 million in 2009, a year after buying a larger estate nearby).
In June, Mr. Paulson snapped up a 90-acre Aspen ranch and an adjoining property from Prince Bandar bin Sultan for a total of $49 million, according to public records, one of the highest prices ever paid for property in the area.
The Aspen ranch was purchased at something of a discount: It was originally listed for $135 million in 2006, making it at that time the most expensive home for sale in the U.S. In both Aspen and Southampton, Mr. Paulson first bought a less expensive home before buying a larger estate nearby in the $40 million range a few years later.
Mr. Paulson, 56, studiously avoids the media, rarely granting interviews. (He declined to comment for this article.) He grew up in a middle-class family in Queens, N.Y., and went to Harvard Business School, eventually starting Paulson & Co. with $2 million he raised partially from family and friends, as well as some of his own money.
He personally occupies a residence each in Manhattan, Southampton and Aspen. He's not just investing in personal real estate, however, but also betting that the housing market will recover as development has slowed and supply diminishes. On Monday, funds managed by Paulson & Co. bought $30 million worth of stock in William Lyon Homes, a Newport, Calif.-based builder. Paulson & Co. now owns about 25,000 home sites in Florida, Arizona, Nevada, Colorado and California—all acquired through distressed sales.
Last summer, Mr. Paulson's office released a statement around the time of his purchase of Hala Ranch saying that he has both directly and through his funds "substantial real-estate interests across the United States, including other properties in Colorado, Arizona, California, Nevada and Florida and Hawaii." Although he has rarely spoken about his holdings, the statement also said that "Mr. Paulson continues to be interested in real-estate opportunities across the U.S."
Brokers across the country familiar with Mr. Paulson's personal homes say that the purchases—some of which, like Hala Ranch, are among the biggest trophy properties in the U.S.—have mostly retained their value through the real-estate downturn. Maureen Stapleton, an Aspen broker, says that Mr. Paulson paid a "fair price." "What he bought is very unique," she says. "It's a tremendous piece of property and the size of the home you just can't duplicate here in Aspen—so I certainly think it will hold its value over the long term."
Then the billionaire investor somewhat reversed course, arguing that the housing cycle had hit a low point. "If you don't own a home, buy one," he said in a 2010 speech at the University Club in New York. "If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home." So far, that bet has been a loser: The Wall Street tycoon lost about $3 billion personally in 2011, according to people close to the hedge-fund manager, speculating that the economy would recover faster than it did.
But through the downturn Mr. Paulson—whose net worth is estimated to be around $11 billion, according to people familiar with his situation—continued his real estate spending spree. Over the last eight years, he has spent more than $145 million on six properties, including two estates in Southampton, N.Y., two properties near Aspen, Colo., and two residences in Manhattan, where he is based, according to public records. (He later sold one of the Southampton properties, for $10 million in 2009, a year after buying a larger estate nearby).
In June, Mr. Paulson snapped up a 90-acre Aspen ranch and an adjoining property from Prince Bandar bin Sultan for a total of $49 million, according to public records, one of the highest prices ever paid for property in the area.
The Aspen ranch was purchased at something of a discount: It was originally listed for $135 million in 2006, making it at that time the most expensive home for sale in the U.S. In both Aspen and Southampton, Mr. Paulson first bought a less expensive home before buying a larger estate nearby in the $40 million range a few years later.
Mr. Paulson, 56, studiously avoids the media, rarely granting interviews. (He declined to comment for this article.) He grew up in a middle-class family in Queens, N.Y., and went to Harvard Business School, eventually starting Paulson & Co. with $2 million he raised partially from family and friends, as well as some of his own money.
He personally occupies a residence each in Manhattan, Southampton and Aspen. He's not just investing in personal real estate, however, but also betting that the housing market will recover as development has slowed and supply diminishes. On Monday, funds managed by Paulson & Co. bought $30 million worth of stock in William Lyon Homes, a Newport, Calif.-based builder. Paulson & Co. now owns about 25,000 home sites in Florida, Arizona, Nevada, Colorado and California—all acquired through distressed sales.
Last summer, Mr. Paulson's office released a statement around the time of his purchase of Hala Ranch saying that he has both directly and through his funds "substantial real-estate interests across the United States, including other properties in Colorado, Arizona, California, Nevada and Florida and Hawaii." Although he has rarely spoken about his holdings, the statement also said that "Mr. Paulson continues to be interested in real-estate opportunities across the U.S."
Brokers across the country familiar with Mr. Paulson's personal homes say that the purchases—some of which, like Hala Ranch, are among the biggest trophy properties in the U.S.—have mostly retained their value through the real-estate downturn. Maureen Stapleton, an Aspen broker, says that Mr. Paulson paid a "fair price." "What he bought is very unique," she says. "It's a tremendous piece of property and the size of the home you just can't duplicate here in Aspen—so I certainly think it will hold its value over the long term."
As for what price Mr. Paulson would get if he
flipped Hala Ranch next year, Joshua Saslove, the real-estate broker who
sold Mr. Paulson the ranch, is mum. "These kinds of trophy properties
are like apples—they're not for buying or selling. They're meant for
eating."
Aspen, Colo.
$49 million
(Credit: Joshua Saslove)In
June, Mr. Paulson bought two parcels of land from Prince Bandar bin
Sultan: the 90-acre Hala ranch as well as a contiguous 38-acre property
called Bear Cabin. Previously listed for $135 million, Hala Ranch has a
main house that spans 56,000 square feet with 15 bedrooms, including a
master suite, a beauty parlor, a massage room and 27 bathrooms. There's
also a tennis court, swimming pool, racquetball court and steam room on
the property, as well as a water-treatment plant, which cleans water so
it can be recirculated and reused on the ranch. Nearby there's a
mechanical shop, which has its own gas pumps. Mr. Paulson is renovating
the ranch, people familiar with the situation say. He also has a second
Aspen home: In 2010, he spent $24.5 million on a home just a few minutes
from downtown Aspen.
(Natalie Keyssar/The Wall Street Journal)Manhattan
$14.7 million
Mr. Paulson bought a 28,500-squarefoot townhouse on the Upper East Side in 2004. The property, which was built around 1917, once housed the Town Club, a private club that is now defunct. When the sixstory townhouse was home to the club, it had a pool, hair salon and steam room, according to public records. Mr. Paulson undertook a major renovation of the building around 2005, converting it into a single-family unit.
Southampton, N.Y.
$41.3 million
In 2008, Mr. Paulson bought this estate, which is known as Old Trees and spans 10.4 acres on Lake Agawam. There's a 15,000-square-foot home, a barn that was renovated to be a guesthouse, a tennis court and two pools. Lloyd Blankfein, CEO of Goldman Sachs, nearly went into contract on the home, according to a person familiar with the situation, before backing out at the last minute. Mr. Blankfein's representative confirmed that he nearly bought the property. A year after buying Old Trees, Mr. Paulson sold another home in Southampton for $10 million—well below the $19.5 million he tried to sell it for in 2008 and the $12.8 million he paid for it in 2006.
(Natalie Keyssar/The Wall Street Journal)Manhattan
$2.9 million
In 2010, he also bought an apartment in midtown, on the 26th floor of Olympic Tower on Fifth Avenue, according to public records. The two-bedroom property, which spans 1,797 square feet, was listed originally for $3.2 million. It isn't clear if Mr. Paulson uses the property personally. The broker for the property declined to comment. His representatives declined to comment on the sale.
Aspen, Colo.
$49 million
(Credit: Joshua Saslove)In
June, Mr. Paulson bought two parcels of land from Prince Bandar bin
Sultan: the 90-acre Hala ranch as well as a contiguous 38-acre property
called Bear Cabin. Previously listed for $135 million, Hala Ranch has a
main house that spans 56,000 square feet with 15 bedrooms, including a
master suite, a beauty parlor, a massage room and 27 bathrooms. There's
also a tennis court, swimming pool, racquetball court and steam room on
the property, as well as a water-treatment plant, which cleans water so
it can be recirculated and reused on the ranch. Nearby there's a
mechanical shop, which has its own gas pumps. Mr. Paulson is renovating
the ranch, people familiar with the situation say. He also has a second
Aspen home: In 2010, he spent $24.5 million on a home just a few minutes
from downtown Aspen.(Natalie Keyssar/The Wall Street Journal)Manhattan$14.7 million
Mr. Paulson bought a 28,500-squarefoot townhouse on the Upper East Side in 2004. The property, which was built around 1917, once housed the Town Club, a private club that is now defunct. When the sixstory townhouse was home to the club, it had a pool, hair salon and steam room, according to public records. Mr. Paulson undertook a major renovation of the building around 2005, converting it into a single-family unit.
Southampton, N.Y.
$41.3 million
In 2008, Mr. Paulson bought this estate, which is known as Old Trees and spans 10.4 acres on Lake Agawam. There's a 15,000-square-foot home, a barn that was renovated to be a guesthouse, a tennis court and two pools. Lloyd Blankfein, CEO of Goldman Sachs, nearly went into contract on the home, according to a person familiar with the situation, before backing out at the last minute. Mr. Blankfein's representative confirmed that he nearly bought the property. A year after buying Old Trees, Mr. Paulson sold another home in Southampton for $10 million—well below the $19.5 million he tried to sell it for in 2008 and the $12.8 million he paid for it in 2006.
(Natalie Keyssar/The Wall Street Journal)Manhattan$2.9 million
In 2010, he also bought an apartment in midtown, on the 26th floor of Olympic Tower on Fifth Avenue, according to public records. The two-bedroom property, which spans 1,797 square feet, was listed originally for $3.2 million. It isn't clear if Mr. Paulson uses the property personally. The broker for the property declined to comment. His representatives declined to comment on the sale.
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