How Will Divorce Divide John Paulson’s Serious Estate Holdings?

Billionaire hedge funder John Paulson might have offered absent $100 million to place his name on New York University’s latest building, but that is peanuts when compared to what he could soon section with.

Paulson and his wife, Jenica, are locked in a bitter divorce that will divvy up, amid other things, a authentic estate portfolio well worth hundreds of thousands and thousands of bucks. Paulson, who built his fortune betting from subprime property finance loan bonds before the Terrific Recession, is truly worth $4.8 billion, in accordance to the Bloomberg Billionaires Index. King Solomon built it do the job with a child, but dividing a newborn is child’s engage in compared to a billionaire’s residence portfolio.

A residence for each year

When a pair receives divorced, serious estate tends to be a person of the most sophisticated holdings to mete out — no make a difference the net well worth at stake. Dwelling equity is the solitary major contributor to house prosperity, and that value is extremely vulnerable to alterations in market place ailments. Splitting up true estate is psychologically tricky, also — the home is the backdrop for innumerable relatives memories.

Possibly the couple even has a holiday vacation house. In the case of John and Jenny Paulson, there is a townhouse, an Aspen ranch and Puerto Rico pads, at minimum.

Their major invest in appears to be a $110 million Palm Seaside mansion on 2.6 acres in close proximity to the Intracoastal Waterway and Atlantic Ocean. The house has become a sticking position in the divorce, according to Page Six, which alleges that the few do not have a prenup.

When the Paulsons most popular colder climes, they could decamp to the Hala Ranch in Aspen, a 56,000-sq.-foot mansion as soon as marketed as the most high priced one-household residence for sale in the country. The pair procured it from Saudi Prince Bandar bin Sultan for $49 million in 2012. Then there is the $41 million home on Lake Agawan in Southampton, the $14.7 million Upper East Facet townhouse and the Olympic Tower condo on Fifth Avenue.

Paulson a short while ago sold his townhouse close to the Frick Museum for $5 million, a $23 million lower price from its first inquiring selling price.

Dividing up home in a common divorce demands a scalpel. For multi-billionaires, it necessitates a treasure map.

“In these cases, we have constantly divided up the residences they really treatment about and gotten rid of the ones they really don’t,” claimed Eleanor Change, a major New York divorce attorney with many years of experience managing significant-net-value splits. “It’s genuinely an emotional issue, not a money challenge.”

There is rationale to believe the two will fight it out. Jenny Paulson reportedly found out John experienced filed for divorce by reading through about it in Website page 6, and resources instructed the gossip column previous calendar year that Paulson, then 65, was presently dwelling with a 33-12 months-old girlfriend in his swanky Olympic Tower apartment.

Jenny lately filed a go well with against Paulson accusing him of hiding billions of dollars in property. Paulson denies the claim, arguing that Jenny signed the couple’s joint tax returns, which involved the have confidence in she promises he utilized to protect the property.

Both of those John and Jenny Paulson have retained leading-tier attorneys with practical experience handling intricate true estate portfolios. John is repped by William Zabel, whose earlier consumers involve Related Providers founder Steve Ross and hedge funder Invoice Ackman. Jenny employed Robert Cohen, who represented Melinda Gates, Ivana Trump and previous New York Metropolis Mayor Mike Bloomberg in their divorces. Cohen’s company was explained by 1 attorney in an annual ranking as “the company you would go to when you want to send out a message that you indicate business and you are out for blood.”

Lawyers for John and Jenica did not straight away respond to requests for comment.

The sensitive dance

John and Jenny wed in 2000 in Southampton, the same town the place John pulled off 1 of his 1st main real estate coups, in accordance to “The Greatest Trade At any time,” a e-book about Paulson by journalist Gregory Zuckerman.

In 1994, as Paulson was grinding to discover buyers for his new hedge fund, he heard about a home in Southampton owned by a few that was, fittingly, in the midst of a divorce. He attained out to the wife, who agreed to provide him the dwelling for $425,000. The sale fell by way of and the residence went into foreclosure.

On a wet August early morning on the measures of the Southampton Courthouse, Paulson outbid GE Capital for the residence, but not by much: He scored the beachside mansion for just $235,000, hardly far more than half of what he’d planned to fork out. Later that yr, he purchased a Soho loft — quickly to turn into his bachelor pad — out of foreclosures.

The loft parties grew aged by the late ‘90s, and Paulson made a decision it was time to settle down. Jenny, whom he experienced met for the duration of his days at Bear Stearns, was operating as his secretary and checked all the containers. Paulson was by now rich, but nowhere around the amount he would turn into in the course of the marriage, a simple fact that enormously complicates the divorce.

Paulson’s windfall arrived in 2007, when his firm Paulson & Co. manufactured $15 billion on the housing crash. His personalized reduce came to virtually $4 billion, and he took property a further $2 billion from equivalent moves in 2008 and early 2009.

Uncertainty in the housing market tends to make it a lot more durable to convey to how a lot the Paulsons could get for their added properties, or whether or not they will sell them at all. It can be tough to assess the value of any property in this natural environment, especially one in a stratosphere at which the big difference in between $55 million and $59 million can be an appraiser’s temper on a presented day.

“I have conditions where by I have had a few appraisals carried out,” stated Caroline Krauss, another foremost matrimonial attorney specializing in high-internet-truly worth clientele. “We have an appraisal, then we update it, then we update it once more. Wildly differing values. It’s just so arbitrary.”

An additional of Krauss’ purchasers owned a $9 million condominium, but his spouse “dragged her feet” as interest charges rose.

“We fully skipped the current market, and the apartment is now languishing,” Krauss stated. “Just waiting an excess month has a large impression on some of these people.”

With curiosity fee hikes still on the table, some high-net-worthy of couples are agreeing to co-personal homes until eventually factors settle down. “It’s happening now a tiny a lot more simply due to the fact folks consider that residences will go up in value the moment we get beyond the existing crises, assuming we do,” Alter stated.

A different unlikely but not not possible solution is to carry on to share a residence, switching off stays.

“In my practical experience, [co-use] is an unmitigated catastrophe,” Change mentioned. It performs for a bit, but as soon as just one individual begins relationship once again, and she finds a hair clip or he finds birth manage tablets, every thing falls aside.

The Paulsons will also have to take care of their professional actual estate holdings. When Marriott acquired Starwood Hotels and Resorts in 2015, Paulson & Co. was Starwood’s premier shareholder. It is unclear how substantially of that inventory, if any, Paulson however controls. The trader also retains stakes in Puerto Rican resorts, such as at the very least the Condado Vanderbilt Hotel, St. Regis Bahia Beach front Resort and La Concha Renaissance.

The Wall Street Journal noted in 2021 that Paulson was on the lookout to provide the Condado Vanderbilt and La Concha, which he experienced purchased in 2014 for $260 million. Brokers advised the outlet the resorts could fetch upwards of $500 million.

Paulson has been bullish on Puerto Rican actual estate in normal, telling the Puerto Rico Expenditure Summit in 2016 that his investments on the island had been personal, not by means of his hedge fund (despite the fact that the fund has because been converted into a family members business office). He also told the convention he created a getaway dwelling and purchased an condominium on the island, comparing its serious estate probable to Miami qualities in the 1980s. “There was a ton of serious estate on the seashore, heaps of abandoned properties and vacant loads. That was surely the most effective time to get,” Paulson mentioned at the time.

Federal filings display that as of the 3rd quarter, Paulson & Co. was intensely invested in gold and mining, alongside with some investments in software package and electricity. The agency also owns approximately 1.3 million shares of Newmark Group, at present value about $10.4 million. That adds up to a lot less than 1 p.c of the relatives office’s holdings.

Commercial actual estate is usually a lot easier to divide up and “not ordinarily as bitter as personal true estate,” Change said.

All this just for the authentic estate — there’s nevertheless little ones, investments, art and jewelry.

“If people are reasonable, they can do it,” Change reported. “But if they’re determined to battle about almost everything, then authentic estate is a great point to fight above.”

Contact Joe Lovinger