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SoftBank founder Masayoshi Son has piled debt on the Silicon Valley mansion he acquired for a record sum, using the showpiece house as security for a multimillion-dollar loan.
The technology investor tapped his sprawling nine-acre estate in Woodside, California, for cash in December 2019, at a time when his company’s fortunes were cracking under the weight of a failed WeWork IPO and Son was struggling to raise billions for a second Vision Fund.
Public records show that the Delaware-registered entity Son used to buy the property, SV Projects LLC, mortgaged the house to secure a ¥10bn loan — worth $92mn at the time — from Japanese bank Mizuho to another Delaware entity called SV America Inc. Details of the loan have not previously been reported.
Son bought the Woodside estate 11 years ago, paying $117.5mn — then the most for a US residential property — to acquire the property from Tully Friedman, co-founder of private equity giant Hellman & Friedman.
The new owner was originally cloaked by his limited liability company, but Son was revealed to be the buyer a few months after the purchase by the Los Angeles Times.
While not necessarily indicative of the market value, the price Son paid was nearly six times the home’s assessed value for property taxes at the time, according to public records. Even today, after a real estate boom in the area and a remade mansion, it is perhaps worth even less than the debt on the property.
Property site Redfin estimates the home is worth $23mn, though top real estate agents in the area said recent comparable sales would probably put its value in the range of $75mn to $90mn.
In recent years, the SoftBank chief has prodigiously tapped the Japanese group’s assets for cash, at one time or another encumbering everything from its shares in UK chip designer Arm to a chunk of its Alibaba stake.
Son also began to borrow personally from SoftBank to foot the bill for his investments in the group’s second Vision Fund, Latin America fund and shortlived hedge fund unit, SB Northstar. By the end of September, his personal debt to the tech group topped $5bn.
Nestled at the top of a hill and shrouded behind trees and fences, Son’s European-style villa is now mostly hidden from passers-by. Planning records show it has an elevator, bowling alley, four storeys and at least as many urinals.
Two people familiar with the purchase said Friedman was not looking to sell when Son approached him. Town records show he had just spent nearly a decade crafting a Georgian-style mansion on the land, but ultimately Son’s cheque book won the day.
“Tully said make me an offer and that’s what it took,” said one of the people.
Son soon decided to rebuild Friedman’s mansion, landing his SV Projects LLC at the centre of controversy in the little town of Woodside.
While his team handling the project won approval for a remodel, town staff visited the site in 2014 and discovered the “entire first floor was demolished . . . [and] the second and third floors were shored up above the basement”, according to a town report. Work was ordered to a halt.
Residents complained that they felt misled by the expanding project. “We’re struggling with the damage that has been done, and the waste of an eight-year-old house that has essentially been thrown away,” commented a planning commissioner at a July 2014 town meeting.
Neighbour Larry Sonsini, name partner of international law firm Wilson Sonsini, said at the meeting that he knew the owner, “who is a reputable businessman”, and urged the town to let the construction finish as fast as possible.
Eventually lawyers for SV Projects LLC prevailed. Work continued with an added $106-an-hour “special inspector” on site to monitor compliance.
Son’s new villa was completed just as SoftBank pulled in tens of billions of dollars from the Middle East to launch the $100bn Vision Fund. Soon a stream of Silicon Valley entrepreneurs were venturing up the home’s long gated driveway to pitch Son their biggest ideas.
SoftBank led a $250mn funding round for data security start-up Cohesity after the founder pitched Son there. Meanwhile, the founder of robot pizza maker Zume piloted one of its trucks up the hill to serve Son freshly heated pizzas, according to Bloomberg. SoftBank invested $375mn.
“It felt ostentatious,” recalled one tech founder who has met Son there. “Everything just looked expensive, from the sofa to the lighting fixtures.”
Son, SoftBank and Mizuho declined to comment. Friedman did not respond to a request for comment.
Additional reporting by Robert Smith in London and Kana Inagaki in Tokyo