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The history of Neverland Ranch, the home of Michael Jackson (2008)

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The history of Neverland Ranch, the home of Michael Jackson (2008)

Post by Admin on Sat Nov 23, 2013 5:26 pm

The history of Neverland Ranch, the home of Michael Jackson
by Ray Clancy

November 11, 2008

We have all heard about it, we have all heard about him, but what exactly do we know about his infamous Neverland Ranch which has been in the press thousands of times. The name Michael Jackson and Neverland Ranch have been linked for many years and while there has been some controversy there is no doubt that Jackson used his millions to build up what was in effect a basic area of land into one of the largest private theme parks in the world. However, the fun park is just part of this amazing development.


Where is Neverland Ranch (or Neverland Valley Ranch to give it its proper name)?

Neverland Ranch is in Santa Barbara County, California and the full address is 5225 Figueroa Mountain Road, Los Olivos, CA 93441. The development itself is about 5 miles north of Los Olivos which is in the Santa Ynez Valley.  


When was the property acquired?

As a consequence of the potential default on loans covered by the Neverland Ranch (which we will cover later) paperwork was found detailing the purchase back in 1987 for somewhere in the region of $30 million. The land itself was acquired from golf course entrepreneur William Bone but even he was unaware of the massive changes which Michael Jackson had in store.


What is the current value of Neverland Ranch?

While a valuation of the property is very hard to determine because of a lack of accessibility to the ground, US news programme Entertainment Tonight suggested back in 2004 that the total development was worth about $120 million. However there is speculation that this is well short of the market value although interestingly the Santa Barbara County assessor’s office placed a value of $96 million on the property for tax purposes.


Neverland Ranch

Michael Jackson turned the Neverland Ranch into the largest private fun park in the world where many thousands of children were entertained in a world which for many was a dream. The amusement park opened in 1988 and while it is no longer in operation the facilities over the years have been second to none.

Some of the attractions included:-

Private zoo
Theme park
Ferris wheel
Merry-go-round
Zipper
Spider
Sea dragon
Wave swinger
Super slide
Dragon wagon kiddie rollercoaster
Bumper cars
Private train service

These are just a small selection of the rides and developments which were added to the amusement park on an ongoing basis. Originally named after the island in Peter Pan where children never aged, time did finally catch up with Neverland Ranch and the future still appears to be uncertain.

Even though the property is valued at over $100 million by a number of third parties, in October 2007 there were rumours that Michael Jackson was in financial trouble and Neverland Ranch may be taken from him. However, this was denied by the Michael Jackson team and all of the controversy seemed to die down until February 2008 when Michael Jackson received official word that unless he was able to pay off the outstanding finance of $24,525,009.61 the property would be auctioned off in Santa Barbara, California in front of the county courthouse.

Many people will be unaware but there was more than just a theme park to Neverland Ranch where the massive Jackson house contained the latest gadgets, a multitude of themed rooms as well as some very expensive artwork which Michael Jackson had built up over the years. The $30 million initial investment was now worth well in excess of $100 million and still Michael Jackson was unable to cover his personal debts.

As we approached one of the largest personal foreclosures in US history it was revealed that in March 2008 a private equity firm by the name of Fortress Investment stepped forward to save the ranch and allow Michael Jackson to retain ownership. The foreclosure auction was formally cancelled in May 2008 after another investment company by the name of Colony Capital LLC took over the $24.5 million debt against the property effectively taking control of Michael Jackson’s personal finances.

Earlier this year it was announced that Michael Jackson was in talks with Colony with regards to the future of Neverland Ranch and the overall position of his personal finances, which have been decimated over the last decade by various controversies.


Why would Colony Capital LLC acquire Michael Jackson’s debt?

While the debt was valued at $24.5 million, secured against property, the chances are that the investment company involved would have paid less than $24.5 million to take on the obligation. They are well aware that the property itself is worth well in excess of the $24.5 million outstanding but this gives them an entry into one of the most prominent property developments in the area.

The heavy involvement in the future of Neverland Ranch would also give the investment company access to possible joint ventures and developments with Michael Jackson who would be able to use the property as collateral for any possible transactions. Colony Capital LLC is a real estate company which runs a number of property funds and joint-venture arrangements. The company was founded back in 1991 although it is only of late that they have hit the headlines in the real estate sector.

To date the major purchases include:-

July 2005, acquisition of Raffles International, which consists of the Raffles Hotel and Swissotel brand names. There are plans to expand the brand across Asia.

January 2006, purchase of Fairmont hotels and Resorts in a joint venture with Kingdom Hotels International at a cost of $3.24 billion.

April 2006, the acquisition of French football team Paris Saint-Germain for an undisclosed fee. Is it a coincidence that the team is based at the Parc des Princes which is one of the best sports stadiums in France?

February 2007, the company signed an agreement to buy Station Casinos in a $5.5 billion joint venture with the Fertitta family.


Conclusion

We have seen many celebrities move into the property market, some have done well and some not so well, but few can have had the impact that Michael Jackson had after acquiring the Neverland Ranch. He built up a property from $30 million to somewhere in excess of $120 million in a matter of 20 years ago although as his fame faded, his finances deteriorated and the man who once ruled pop was in the hands of third party investment companies who would try to squeeze the life out of him.

Knowing when to buy, knowing what to do and knowing when to sell all sound very simple in theory but in practice this is not always the case. Michael Jackson’s wish to retain Neverland Ranch nearly broke him and could yet put him in the hands of third-party investors for years to come.

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Personal note: Many ask about the history of Neverland. This is written by a property representative publishing USA properties histories. Keep in mind this was published in 2008. We all know there have been changes regarding more recent happenings regarding NVR.

 


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Michael Jackson transcended our imaginations and continues to uplift our souls and spirits through his tremendously meaningful life well lived.
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