In the mid-eighties, I was in a partnership with a consortium of Middle East financial institutions and banks, running their real-estate portfolio as their partner in North America. We had a prestigious office on the 37th floor of The Union Bank Building in Downtown, Los Angeles. Across the street from my office was a development of three buildings known as Bunker Hill Towers. There was one building with 32 stories and the other two had twenty-plus stories. All of the buildings were owned by Prudential Life Insurance, who had decided to convert them from apartments to condominiums. When they did that, they gave their tenants first right of refusal to buy them at a lower price than they would have been offered on the open market.
I decided I wanted to buy one of the condos for the company so we had a place for visiting partners and clients to stay, and I found a suitable one-bedroom candidate on the eighth floor. After I purchased it for the company, I was in the elevator with the in-house realtor one day, when I asked her if there was anything else available in the building. The value of these buildings, to me, was that they were within walking distance to my office. At that time, I was, rather painfully, commuting into town from Huntingdon Beach – about an hour each way – every day. So, I became interested in buying one for myself, as well as the one I bought for the company.
The realtor said, “There’s not much left really, but there is one on the ninth floor where there was a fire, and then there are the penthouses but I don’t think you would be interested in them.”
I said, “Why not? Let’s go and have a look.”
We went up to the top floor where there was a penthouse on each corner, only one of which had been bought by a tenant when they took up their first right of refusal. The other three had been left empty and stripped back to the bare walls – and left that way for well over five years. I viewed the remaining three penthouses and the asking prices started from $525,000 for the northeast corner, to $555,000 for the northwest corner, and $585,000 for the best-facing southwest corner. After quick, but careful, consideration, I decided to make an offer to buy all three penthouses for $990,000. My offer came with a list of caveats that shocked the realtor, such as only putting down a $5,000 deposit on each apartment, with Prudential agreeing to a long escrow, and providing 75% financing.
Much to my surprise, Prudential accepted the offer!
With all wheels in motion, I planned to keep the southwest corner apartment for my own use and to sell off the other two apartments for what I’d bought all three for. That way I could end up with mine essentially free. Low and behold, I sold the northwest corner to a very well-known doctor and I sold the northeast corner to a big media company. So, in essence, I got my apartment for free and then made a sizeable investment into renovations, that took over one year to complete. As part of the renovations was a 400-gallon seawater fish tank, electric curtains, a sauna, steam room, and jacuzzi; you name it, I had it installed – together with high-end furnishings and artwork throughout, including a white baby grand piano. To this day my penthouse apartment is still talked about and I held some spectacular parties and kept it until I left LA in the mid-1990s. As far as I know, the Japanese lady who bought the penthouse from me has kept the curtains closed to this day. Most likely, she’s just happy to be sitting on an appreciating real estate asset worth somewhere near two million dollars.
It was the most spectacular penthouse you can imagine and the purchase stands out as one of my more outstanding real estate acquisitions – particularly from a personal point of view.
