It is a fall from grace story with all the components of a Hollywood blockbuster, featuring tens of millions of dollars, glamorous real estate and dashed dreams. Its protagonist: a cosmetic dermatologist to the stars, known for his Botox and buttock-enhancement procedures, who tried his luck as a megamansion developer.
The resulting Bel-Air mansion, complete with a DJ booth, a Champagne tasting room and an NFT art gallery, is now slated to hit the auction block after the developer, Alex Khadavi, filed for bankruptcy protection, court records show. In a bankruptcy court hearing in Los Angeles on March 30, Judge Sheri Bluebond indicated that she could soon sign off on the sale of the property, Dr. Khadavi’s largest asset, by auction with a reserve price of $50 million. A reserve price is the minimum amount that the owner of an auction item will accept as the winning bid.
The 21,000-square-foot mansion is the brainchild of Dr. Khadavi, 49, with slick black hair and high cheekbones, whose penchant for perfectionism led him to spend roughly $30 million on the home’s construction, not including land cost. That was about three times his originally projected budget, he said.
Dr. Khadavi, who was born in London and raised for a few years in Iran, bought the site, located on Tony Sarbonne Road with 360-degree views spanning from the San Gabriel Mountains to the Channel Islands, for $16 million in 2013, he said. Like a number of LA developers who piled into the luxury-home market over the past few years, Dr. Khadavi had little experience in the field, a fact he acknowledged. He said that, though he had purchased and remodeled a number of homes in the area, they were primarily in the sub-$1 million price category. He also said he didn’t have connections with the types of contractors capable of taking on a project of this scale.
He spared no expense, splashing out on the most expensive materials, such as high-end calacatta extra-gold marble and staining the wood floors with 24-karat gold dust.
“The marble budget was $10 [per square foot],” Dr. Khadavi said. “I clearly made a mistake because we bought $150 [per square foot] calacatta extra gold. It’s like if you go in to buy a Prius and they show you a Ferrari.”
The modern, seven-bedroom house is the product of Dr. Khadavi’s wild imagination and reflects his passion for digital art, music and design, he said. It sits behind large, mirrored-steel gates and features unusual amenities such as a secret DJ platform that emerges from the floor on a hydraulic lift and an NFT art gallery featuring pieces by artists such as Bighead, a record producer and DJ who worked on the production of the 2017 hit “Gucci Gang” by hip-hop artist Lil Pump. There is also a formal dining room, a movie theater, a car museum, a massage room, a tequila bar and a Champagne tasting room.
Dr. Khadavi installed a series of jets in the outdoor pool that are designed to pump in time with music and designed a digital laser show modeled after Disneyland’s elaborate World of Color attraction. Dr. Khadavi’s version involves a rotatable 3-D laser projector on the roof that casts light in the shape of a rhombus over the pool. Dr. Khadavi said much of the home’s design was inspired by the “golden ratio” and Italian mathematician Leonardo Fibonacci’s mathematical sequence, which some consider the key to the human perception of beauty.
About halfway through the project, which Dr. Khadavi said was originally intended for his personal use, he realized that his aspirations for the property had outgrown what he could actually afford to maintain. He would have to put the property on the market. “I dreamed too big,” he said.
Costs were exacerbated by the Covid-19 pandemic, which disrupted the construction schedule, he said. Crews were often out because they said a member had come down with the virus. “People don’t take pride in what they do. Nobody wants to work these days,” Dr. Khadavi said.
Within the first year, he had parted ways with his architect and primary contractor, he said, and he later ran into issues with the work his contractors had performed. A beam they had installed was blocking the views from the primary bedroom and had to be ripped out, he said. Contractors also failed to adequately waterproof the guesthouse. “I had to rip up a million dollars of marble,” he said.
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Dr. Khadavi put the property on the market for $87.777 million in May 2021, listing it with high-end agents Aaron Kirman of Compass and Mauricio Umansky of The Agency. The 7s in the price were a reference to his favorite number. (He and his family de el relocated to the US from Iran when he was 7 years old amid the revolution.) Dr. Khadavi said he operates dermatology practices in the Encino and Thousand Oaks areas of Los Angeles. I have first started buying and renovating homes about 12 years ago.
A few weeks after putting the property on the market, I filed for chapter 11 bankruptcy protection, records show. His largest creditors include Axos Bank, a subsidiary of Axos Financial Inc., which slowed around $27 million for the construction of the house, records show. A spokesperson for Axos Bank declined to comment.
Jon Maddux, chief executive officer of FundLoans, a San Diego-based lender, said it is rare to see banks such as Axos caught up in bankruptcy proceedings, since they typically issue loans at a low loan-to-value ratio, meaning that the underlying value of the asset far outstrips the value of the loan. In this case, he said, it is likely that any sale of the property would be enough to satisfy the debt regardless of the circumstances, though he couldn’t explain how Dr. Khadavi had raked in so much in loans without development experience in the first place.
Dr. Khadavi said he believes the house is worth significantly more than the $50 million reserve price being placed on it. “The view itself is honestly worth about $100 million,” he said.
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The dermatologist said he has had offers on the house, but deals fell apart after the Covid-19 crisis made it difficult for international buyers to travel. In court papers, he said he made a deal to sell the property in September 2021 to Green Coin. The company is tied to Poe Qui Ying Wangsuo, a Chinese billionaire known as Mr. Pink for the ginseng drink of the same name that his company produces, records show. That deal fell apart, however. An attorney for the reported buyer did not respond to a request for comment. The agents on the deal were Mr. Kirman, who declined to comment on the transaction, and Mr. Umansky, who wasn’t available for comment.
Dr. Khadavi pointed to recent major deals in LA, such as the sale of a Bel-Air estate to Coinbase chief executive Brian Armstrong for $133 million in December. Dr. Khadavi noted that the number constituted a much higher price per square foot than he is asking for his house from him.
Dr. Khadavi is one of a small group of LA cosmetics professionals—dermatologists and plastic surgeons—who have jumped into the luxury-home market in recent years, some with little experience in the arena. Some have had trouble unloading their properties even with fervent marketing efforts, and the properties have lingered on listing sites for years despite a relatively healthy market for luxury homes in the area. For instance, Dr. Raj Kanodia, a prominent rhinoplasty specialist, has a spec home he built on the market for $99 million, down from the $180 million he asked when it first came on the market in the summer of 2018. Dr. Kanodia did not respond to a request for comment. Dr. Kanodia has previously said that he priced the spec home so high because the house next door was on the market for a similarly ambitious sum.
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The Khadavi house would also be the latest in a string of major homes to hit the auction block in recent months. In September 2021, Berggruen Holdings, the president of which is billionaire investor Nicolas Berggruen, closed on the Hearst estate in Beverly Hills at auction with a $63.1 million winning bid, far below the onetime $195 million asking price. Similarly, The One, the Bel-Air megamansion built by developer Nile Niami and once slated to list for $500 million, recently sold at auction for a winning bid of just $126 million following a bankruptcy proceeding. Mr. Niami did not respond to a request for comment.
Stephen Shapiro of Westside Estate Agency, a luxury agent who isn’t involved with the auction sales, said these auctions tend to be the “last resort.” They are often the result of a developer placing a wholly unrealistic price on a property early on, then having to repeatedly slash it.
“It’s not like an art auction where the prices are bid up,” he said of the auctions. “These are just bid down. These are desperation sales.”
There are also those who have no business playing in the spec home space and rather have been lured in by the strength of the market, Mr. Shapiro said. Dr. Khadavi has said that he initially built the home for his personal use of it. He said he doesn’t believe auctions are the last resort, but rather provide an opportunity to cast a wide net for buyers quickly.
He said he is confident that his property will sell for in excess of the reserve price. “I have a nice buffer over here. I’m not going negative like the people at The One,” he said. “Everybody’s going to get paid.”