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Michael Jackson's Neighborly Real Estate Deal
Over the weekend, the King of Pop narrowly averted foreclosure when the billionaire real estate investor Thomas Barrack struck a deal to buy a $23.9 million loan on Neverland Ranch from Fortress Investment Group, which was ready to auction it off.
Just who is this white knight that saved Michael Jackson's notorious property from falling into the hands of some real estate bottom-fisher at the 11th hour?
Turns out it's his neighbor.
Barrack, who has made billions from investments by his private equity firm Colony Capital, is the polo-playing owner of a 1,200-acre ranch that's "[n]estled between the Ronald Reagan estate and Michael Jackson's Neverland" outside of Santa Barbara, according to a 2005 profile of the tycoon in Fortune.
Barrack is no stranger to distressed real estate deals, but he typically has to look farther than his backyard to find them. Neverland, which once featured a Ferris wheel, and roller coaster and a zoo when it was a controversial destination for thousands of children, has reportedly been neglected since Jackson fought molestation charges and moved out of the country several years ago.
So why did Barrack want to let Jackson to keep the ranch? It's not likely because the two are particularly close friends (the two sprawling ranches are 11 miles down the road from one another, making cup-of-sugar borrowing difficult). The distance also means that it's not that Jackson's prolonged absence makes him a quiet neighbor. And it's unlikely that Jackson's ownership boosts the value of neighboring ranches like Barrack's.
A person close to the deal said that, while Barrack and Jackson do know each other, the deal is strictly a business one. "The proximity makes Colony comfortable holding the note," the person said.
It's also possible that Barrack bought the loan from Fortress so that he could have more control over its fate when the financially troubled pop star eventually decides to unload it.
That, and the fact that the real estate savvy Barrack saw a good deal and he seized it.
by Megan Barnett
Photograph by Mark J. Terrill/AP Photo
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