The first loan, which a source close to the project said also refinanced existing bank debt, was $82.5 million with a minimum interest rate of 11%. It included an agreement that should the house sell for more than $200 million, Hankey would get $3.5 million of the sale.
Niami came back a little over a year later and borrowed an additional $8.5 million at the same rate, paying a loan fee of $82,500. He also agreed to more onerous terms: giving Hankey a percentage of the profits if the house sold for $100 million to $200 million.
Two months before the loans were due, Niami came back for a third helping, and got an additional $15 million at the same interest rate. There were no changes to the profit-sharing arrangement, but this time the developer had to cough up a $1-million application fee.
The total: a whopping $106 million that Crestlloyd defaulted on when it all came due on Oct. 31, 2020 — and it’s growing with interest and penalties. But Hankey is not the only lender owed by Crestlloyd, according to a title report provided by the receiver.
There is a lot of money wrapped up in this house and it is unclear whether those involved will get what they hoped for. Almost regardless of what happens in the short-term, this house will live on in future memories because of its price-tag and location. Will it end up being a cautionary tale/disaster or an eventual success in a land of mega-mansions and wealthy residents?
Because this is one of the most expensive properties around, would the fallout from the subprime lending receive more attention or less attention compared to the consequences of subprime loans in the late 2000s? How long would it take to sort out debt and payments in court? While there are wealthy actors involved, a lot of money could be lost and even the wealthiest would feel a loss of $50-100 million on a single house.