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Will California Buy Neverland Ranch?

No one seems to know what to do with Neverland Ranch, Michael Jackson's former home in Santa Barbara County. The AP has reported that one possibility for the 2,500 acre estate is for it to become a state park and tourist attraction. Assemblyman Mike Davis is saying that the California Department of Parks and Recreation should consider whether or not to take over the ranch. The ranch could become a destination for Jackson fans from around the world.

The estate is currently owned by Colony Capital LLC, a Santa Barbara-based private equity firm, that worked with Jackson to save the ranch when he nearly lost it to foreclosure in 2008. Jackson signed over control of the estate to Colony Capital for $35 million in 2008 and the company co-owns the property with the Jackson family. The model for this type of venture is Graceland, Elvis Presley's home in Tennessee which still draws thousands of visitors each year but Graceland is privately run. Jackson hadn't lived at Neverland since 2005. After he was acquitted of child molestation charges, he lived around the world spending time in Bahrain, Ireland and Las Vegas before returning to Southern California and renting a home in Holmby Hills.

With California facing a $19 billion deficit many state parks have already faced closure. Governor Schwarzenegger is looking to unload land, not acquire more. A California ballot initiative has Californians facing a possible $18 surcharge on vehicle license fees to create a fund to support state parks. In the AP story Davis admits this would be a huge hurdle and that any move would have to be a public-private partnership. He says he might create a bill or resolution to consider the opportunity after the summer break. NAACP president Alice Huffman and others had approached him with the idea. Another hurdle is that local residents have always blocked any plans to turn Neverland into a heavily trafficked public space. Many of the rides and other special features that were at Neverland Ranch when Jackson lived there have been sold off and the property would likely need some updates and refurbishments to be viable as a tourist attraction.

Tags: colony capital, michael jackson, neverland ranch, santa barbara county

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Annie Leibovitz Gets New Debt Deal

by Deidre Woollard (RSS feed) —

Filed under: Art, Wealth

There's an update in the Annie Leibovitz debt saga. For the last year Leibovitz has been struggling with a heavy debt load. She borrowed $24 million from Art Capital Group and as collateral the company took not only her two homes and all her negatives and the copyright to her photographs but also an agreement to sell her archives to repay the loan and the rights to arrange the sale. Now Businessweek reports that Colony Capital LLC has agreed to take over her debt after she bought back control of her works and real estate from Art Capital Group.

The situation got ugly last year when Art Capital sued for breach of contract claiming she wasn't letting real estate agents into her homes and was blocking attempts to sell her photos. In the new agreement, Colony, will help market her photos. Art Capital has confirmed that its debt has been satisfied. Like so many people, Leibovitz ran into trouble with real estate. She bought several properties and spent a small fortune renovating them, using the properties themselves as collateral. She was also late in paying $1.8 million in federal taxes in 2007 and 2008.

Art Capital is in the business of making money off art and sometimes, artists. The company issues loans of $500,000 or more at interest rates from six percent to 16 percent to those who have artwork worthy of making such a loan. Another artist, Julian Schnabel also ran afoul of Art Capital. He took out an $8 million loan in 2006, when he was building his pink folly known as Palazzo Chupi and later sued Art Capital.

Colony might be more interested in the real estate than the art. Colony Capital still owns Michael Jackson's Neverland ranch (and may be able to sell it eventually for $50-$100 million). Leibovitz's property holdings include three contiguous brownstones in Manhattan as well as 220 acres in Hudson Valley, New York that was once part of the Astor family's estate Ferncliff.

Tags: annie leibovitz, art capital, colony capital, debt