Viceroy L'Ermitage Beverly Hills, formerly owned by fugitive businessman Jho Low, is being auctioned off US$100 million (RM427.1 million).
Jho Low acquired the 116-room boutique hotel for about $40 million in 2010, the New York Times reported. Low later spent just as much for the hotel's renovation. Proceeds from the auction will be split between the government of the U.S. and Malaysia.
In 2016, prosecutors moved to have the hotel seized from Jho Low as part of an investigation into one of history's biggest foreign bribery and kleptocracy cases. Jho Low was a financier who turned a fugitive from justice, the New York Times report said, after being accused of looting from 1Malaysia Development Berhad amounting to more than $2.5 billion (1MDB), or what is known as the 1MDB scandal.
The Malaysian sovereign wealth fund was intended to finance infrastructure projects. Low was accused of diverting the fund to his personal accounts to purchase real estate, see-through grand piano, paintings by Van Gogh and Monet, and other luxury items. It was also alleged that some of the cash was used to finance the Leonardo DiCaprio-starred movie, "The Wolf of Wall Street."
According to the Real Deal report, the federal government last March has sold the 13,000-square-foot mansion, once owned by Jho Low, located in the exclusive Bird Streets, Los Angeles. It sold for $18.5 million. A condo in New York that was also owned by Low was also sold in May.
The U.S. government said that proceeds from the sale of the seized assets amounting to about $500 million had been returned to Malaysia, the Real Deal report said. On the other hand, the Malaysian government also brought in $126 million for the sale of a 300-foot yacht purchased by Low with embezzled money.
The government now wants to auction off Viceroy L'Ermitage Beverly Hills this summer. Viceroy L'Ermitage Beverly Hills charges roughly $600 per night on average. You will not often see luxury hotels in Beverly Hills come up for sale, special master for the auction Michael Eidelman said.
Given that the tourism industry is still reeling from the economic effects of the lockdown orders coupled with the resurgence of COVID-1 infections that could cause the reopening plans to be put off, it cannot be ascertained how aggressive the auction will turn out, the report noted.
Luxury properties have been hit hard by the lockdown measures, and according to the Fitch Ratings estimates, occupancy levels dropped to under nine percent. Overall, the hotel industry has been running at just around 40 percent occupancy, and it could take some time for the industry to return to normal. STR said, as cited by the New York Times report, it is unlikely that the occupancy level will return to pre-pandemic levels before 2023.
The auction should be completed sometime this summer, and the buyer will then have the right to cancel the management contract of VIceroy.
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