1 3 LOS ANGELES BUSINESS JOURNAL MAY 21, 212 Marginal Returns L.A. s wealthiest residents saw their fortunes sway with the stock market this year. In the end, they reaped some small million-dollar gains. By ALFRED LEE Staff Reporter HE net worth of William Barron Hilton is telling. T After being hit with $6 million in investment losses during the downturn, the former hotelier s fortune shot back up by 45 percent in just two years on the strength of blue-chip stocks. But in the last 12 months, that dramatic rebound slowed due to a stock market that despite a lot of ups and downs ended up almost flat. The Business Journal calculates that Hilton, who sold his stake in the family s hotel chain in 27, saw his wealth rise in the last year by just 4 percent to $2.6 billion. Still, his returns were larger than for many of L.A. s wealthiest residents, who after years of huge drops and rebounds spurred by the downturn and recovery L.A. S saw an average gain of WEALTHIEST only 2.5 percent. Mall magnate Peter Net Worth: Lowy saw just a 1 percent 2.5% rise to $76 million from Cumulative: small gains in publicly $112 billion traded Westfield Group and a family investment Average: vehicle. His net worth had $2.23 billion risen 41 percent the previous two years. Media mogul Sumner Redstone did better, but that means his net worth rose by a steady 5 percent to $4.4 billion. It marked a stark contrast with his recent wild swings in value, down 74 percent in 29, up 65 percent in 21 and up 42 percent last year. (The rebound) has really stalled. It s renewing a lot of concerns, said money manager Brad Levin, president of Legacy Wealth Partners in Woodland Hills. In all, the cumulative fortune of L.A. s 5 wealthiest residents rose roughly $3 billion, far smaller than last year s gain of 16 percent that brought them nearly $15 billion. Only 1 people on the list saw double-digit percentage gains from last year compared with 2 a year ago. The slowdown in growth also means their cumulative wealth remains below a high of $114 billion set prior to the downturn. Biotech entrepreneur Dr. Patrick Soon-Shiong topped the list for the fourth straight year with a net worth up 3 percent to $8 billion. Up and down Still, there were big winners and losers. Shares of Public Storage Inc. rose about 2 percent, propelling largest shareholder Tamara Hughes Gustavson s net worth from $2.4 billion to $2.82 billion. And stock gains in electric-car maker Tesla Motors Inc. helped land founder Elon Musk on the list for the first time. His net worth is calculated at $2 billion. Shares of construction company Tutor Perini Corp., meanwhile, plummeted nearly by half, contributing to Chief Executive Ronald Tutor s decrease in net worth from $79 million to $615 million and dropping off the Business Journal s list. Media and entertainment stocks were a RINGO H.W. CHIU/LABJ House Call: Dr. Patrick Soon-Shiong, L.A. s wealthiest resident, at the Culver City site of his new NantWorks offices. mixed bag. Walt Disney Co. continued its strong rebound. That propelled Michael Eisner, its former chief executive, to the $1 billion mark on the strength of his company stock holdings. On the other hand, a roughly one-third plunge in DreamWorks Animation SKG Inc. shares dropped Chief Executive Jeffrey Katzenberg from $93 million to $865 million. It also partially offset gains in other areas for co-founders Steven Spielberg and David Geffen, limiting the increases in their net worth. Elsewhere, stock gains for Mercury General Corp. and Qualcomm Inc. meant positive returns for Mercury founder George Joseph and telecommunications player Neil Kadisha, respectively. Double-digit losses at Occidental Petroleum Corp. and Dole Food Co. led to declines in the net worth of Occidental Chairman Ray Irani and Dole Chairman David Murdock. It also was a year some wealthy investors moved away from stocks. Financier Michael Milken and his brother, Lowell, have been steadily reducing all of their publicly known stock holdings, recently selling off yet more shares in education companies LeapFrog Enterprises Inc. and K12 Inc. Tutor s stake in Tutor Perini has dwindled by half. And Kirk Kerkorian has sold off nearly $5 million in MGM Resorts International stock since 28. It s been really four solid years of money moving out of stock funds into bond funds and alternative strategies, Levin said. People have not been participating in stocks. One duo bucking that trend was Howard Marks and Bruce Karsh, the co-founders of Oaktree Capital Group. Oaktree had an initial public offering in April. Though the IPO was weaker than expected, each still reaped a $73 million payday and owns a 14 percent stake worth $9 million. Real estate rebound Those with real estate holdings saw better returns. Nationally, commercial properties are up 4 percent in value, according to Costar s Commercial Repeat Sales Index, and the Class A properties owned by local billionaires meant even higher appreciation at those levels. The hottest real estate sector continues to be apartments. Taking advantage has been Donald Sterling, who told the Business Journal he owns 155 buildings in Southern California after acquiring 15 in the last year. Their appreciation helped drive a rise in his net worth from $2.6 billion to $3.25 billion. We saw probably the best returns over the last year for people that were invested in apartment houses, said money manager Lon Morton of Morton Capital Management in Calabasas. Mall developer Rick Caruso, owner of the Grove and Americana at Brand, jumped 1 percent to $2.2 billion on an increase in value on his nearly fully leased, low-debt portfolio. That s up from $1.53 billion in 29. Industrial developer Ed Roski Jr., whose Majestic Realty Co. owns 73 million square feet of property across the country, benefited from a rise in industrial property values nationwide. The Business Journal calculated that his net worth appreciated 4 percent to $2.3 billion. Cable TV entrepreneur Marc Nathanson s net worth jumped 1 percent based on diversified investments, including real estate, which Please see page 32
2 32 LOS ANGELES BUSINESS JOURNAL MAY 21, 212 Continued from page 3 he described to the Business Journal as doing a little better. Murdock s losses at Dole were partially offset by a vast real estate portfolio owned by privately held Castle & Cooke Inc. Still, the struggles of two prominent local developers were a reminder that real estate is no easy game. Apartment developer Alan Casden lost control of six properties after a breakup with partner Cerberus Capital Management. Lenders have also filed for foreclosure on Casden s Beverly Hills headquarters building. The troubles caused the Business Journal to drop his net worth from $2.63 billion to $1.3 billion. Robert Maguire is underwater on his most valuable property, the 9-acre Solana business park in Dallas, resulting in an 8 percent drop in his net worth to $85 million. New investments Despite the lackluster capital markets, the city s wealthiest residents aren t sitting on the sidelines. One area that has received a lot of attention are media and entertainment companies, particularly those overseas. Forever 21 co-founders Do Won and Jin Sook Chang, who saw their net Billionaires Club The number of L.A. billionaires dipped in worth rocket from $2.45 billion to $4.3 billion, invested $43 million in a new South Korea TV channel last year. Univision owner Haim Saban invested $3 million in Hong Kong television company Celestial Tiger Entertainment and $78 million in Indonesian broadcaster Nusantara Media. Kirk Kerkorian has indicated that he was interested in entertainment industry opportunities in the Chinese, Indian and Latin Source: Business Journal research American markets. There was also plenty of local action in that industry as well. Entertainment mogul David Geffen invested in Sony Corp. s $2.2 billion bid to buy EMI s music publishing library. Pending approval, it would be his first major public entertainment deal since co-founding DreamWorks. Michael Eisner is reportedly investing in a film and television production venture for which he s seeking $8 million in financing. Local billionaires also vied to invest in sports teams, most notably participating in the bidding process to buy the Los Angeles Dodgers out of bankruptcy. Several of the people on the Business Journal s list, including Caruso, Casden and Soon-Shiong, placed bids. When former Dodgers owner Frank McCourt finally did sell the team, for $2.15 billion to a group led by Guggenheim Partners, it was enough to land him back on the Business Journal s list at a net worth of $96 million, even accounting for his divorce settlement, banker and attorney fees, taxes and debt. Indeed, sports teams, long seen more as toys than investments, proved to be an unlikely source of big returns this year. Sterling s Los Angeles Clippers, which he bought for $13 million in 1981, had their strongest season in years and continue to appreciate in value. Ed Roski Jr. also benefited from the increased worth in his stakes in the Los Angeles Lakers, which jumped in value by 4 percent due to a new television deal, and the Los Angeles Kings. Most people that are buying sports teams are almost doing it as a hobby, wealth manager Morton said. But there s also the thought that the value of sports teams is going higher and higher. It s kind of a greater fool theory. Meanwhile, others got involved in politics but sometimes less with ideology than business in mind. Roski has contributed more than $75, to politicians in Pennsylvania, where Following the Money The Business Journal calculates the net worth of L.A. s wealthiest residents through several methods. It asks all candidates for details on their portfolio, such as stock holdings, real estate, private equity investments and debt. Some deny our request and ask to be removed from our list. Others provide detailed information, some on the record, some off. Reporters double check provided valuations through the same methods they obtain valutions for those who decline to participate: by consulting public records, data bases and experts. Stock his Majestic Realty is trying to develop a 5- acre industrial park. Mercury s George Joseph, meanwhile, is backing a November ballot measure that would allow insurers to offer discounts to drivers who switch providers. A similar measure he backed in 21 was voted down. The past 12 months also saw the city s wealthiest residents continue their involvement in philanthropy. Among the biggest donors were Kerkorian, who donated $18 million to the Andre Agassi College Preparatory Academy in Las Vegas; Lowell Milken, who donated $1 million for a new business law institute at UCLA; and Berkshire Hathaway Vice Chairman Charles Munger, who gave $1.2 million in company shares to his alma mater University of Michigan. Warren Buffett and Bill Gates Giving Pledge requiring signees give away a majority of their wealth to philanthropy also attracted more Wealthy Angelenos. At least eight L.A. residents have signed the pledge, including one of the newest additions to the list, Tesla s Musk. holdings, for example, are often disclosed in Securities and Exchange Commission filings, while wealth managers, real estate brokers and industry consultants can be very helpful. The final numbers are fairly accurate, but sometimes it is difficult to obtain more than a rough estimate for a minority who have private holdings and refuse to cooperate. The list does not include residents other sources may cite as L.A. billionaires if we cannot obtain our own independent verification Laurence Darmiento The Los Angeles Business Journal is proud to present a tribute to the nonprofits of Los Angeles. We honor those professionals and organizations that continue to make a positive impact on the community and do so under difficult financial constraints. Equally as important are the efforts of the corporations supporting these nonprofits. Many corporate executives volunteer time on boards and lend support through financial donations and sponsorships. These awards recognize both equally important groups. CALL FOR NOMINATIONS Nomination Deadline: Friday, May 25, 212 For more information visit labusinessjournal.com/bizevents AWARDS LUNCHEON Tuesday, June 19, :am-1:3pm Millennium Biltmore Hotel 56 S. Grand Ave., Los Angeles, CA 971 Individual tickets: $95 / corporate table of 1: $8 PRESENTING SPONSOR: PLATINUM SPONSOR: GOLD SPONSOR: Wedbush Bank 212 AWARD CATEGORIES Nonprofit Organizations, Leadership & Support Team Awards Organization of the Year (Small, Medium and Large Categories) Leadership Excellence Nonprofi t Team Project Collaboration Social Enterprise Corporate Citizenship Awards Corporate Partner of the Year Leadership Excellence Volunteer of the Year Corporate Social Responsibility In-Kind Supporter
3 MAY 21, 212 LOS ANGELES BUSINESS JOURNAL 33 Wealthiest Angelenos Ranked by net worth Net worth (in millions) % Rank Rank Angeleno Change 1 1 Patrick Soon-Shiong $8, $7, Eli Broad 6,6 6, Kirk Kerkorian 5,2 5, David Geffen 4,8 4, Ron Burkle 4,5 4, Sumner Redstone 4,4 4, Do Won Don & Jin Sook Chang 4,3 2, Haim Saban 3,35 3, Steven Spielberg 3,3 3, Donald Sterling 3,25 2, Steven Udvar-Hazy 3,2 2, A. Jerrold Perenchio 2,85 2, Tamara Hughes Gustavson 2,82 2, David Murdock 2,8 3, Tom Gores 2,75 2, William Barron Hilton 2,6 2, Marion Anderson & Family 2,59 2, Jeffrey Skoll 2,43 2, Anthony Pritzker 2,35 1, Edward Roski Jr. 2,3 2, Alec Gores 2,25 1, Rick Caruso 2,2 2, Andrew & Peggy Cherng 2,1 1, * Elon Musk 2, * David Whitmire Hearst Jr. 1,9 1,8 6 Net worth (in millions) % Rank Rank Angeleno Change Stewart & Lynda Resnick $1,88 $1, John Tu 1,6 2, Gary Michelson 1,55 1, George Joseph 1,37 1, Bruce Karsh 1,35 1, Howard Marks 1,35 1, Alan Casden 1,3 2, Michael Milken 1,25 1, Neil Kadisha 1,2 1, Thomas Barrack Jr. 1,1 1, Marc Nathanson 1, Charles Munger 1,2 1, Michael Eisner 1, * Frank McCourt 96 * 4 43 John Shea Lowell Milken 9 1, Frederick Ted Field Jeffrey Katzenberg Robert Maguire Aubrey Chernick Ray Irani 8 1, Robert Day Jr Peter Lowy * Jerry Bruckheimer 75 * 5 * James Cameron 65 * 1 recalculated *not on list in 211
4 34 LOS ANGELES BUSINESS JOURNAL MAY 21, 212 The List Ranked by net worth 1. Patrick Soon-Shiong $8 BILLION 2. Eli Broad $6.6 BILLION 3. Kirk Kerkorian 4. David Geffen 5. Ron Burkle $4.5 BILLION $4.8 BILLION $5.2 BILLION 6. Sumner Redstone 7. Do Won Don & Jin Sook Chang 8. Haim Saban $3.35 BILLION $4.4 BILLION $4.3 BILLION THE TOP1 9. Steven Spielberg 1. Donald Sterling 11. Steven Udvar-Hazy 12. A. Jerrold Perenchio $3.3 BILLION $3.25 BILLION $3.2 BILLION $2.85 BILLION 1. PATRICK SOON-SHIONG NET WORTH: $8 BILLION 3% LAST YEAR: $7.8 BILLION AGE: 59 RESIDENCE: WEST LOS ANGELES SOURCE OF WEALTH: PHARMACEUTICALS 13. Tamara Hughes Gustavson 14. David Murdock 15. Tom Gores 16. William Barron Hilton $2.82 BILLION $2.8 BILLION $2.75 BILLION $2.6 BILLION 2. ELI BROAD NET WORTH: $6.6 BILLION 5% LAST YEAR: $6.3 BILLION AGE: 78 RESIDENCE: LOS ANGELES SOURCE OF WEALTH: HOMEBUILDING, INSURANCE 17. Marion Anderson & Family 18. Jeffrey Skoll 19. Anthony Pritzker 2. Edward Roski Jr. $2.59 BILLION $2.43 BILLION $2.35 BILLION $2.3 BILLION 3. KIRK KERKORIAN NET WORTH: $5.2 BILLION 5% LAST YEAR: $5.5 BILLION AGE: 94 RESIDENCE: BEVERLY HILLS SOURCE OF WEALTH: INVESTMENTS, CASINOS 21. Alec Gores $2.25 BILLION 22. Rick Caruso 23. Andrew & Peggy Cherng 24. Elon Musk $2.2 BILLION $2.1 BILLION $2 BILLION 4. DAVID GEFFEN NET WORTH: $4.8 BILLION 7% LAST YEAR: $4.5 BILLION AGE: 69 RESIDENCE: MALIBU SOURCE OF WEALTH: MUSIC, MOVIE PRODUCTION 25. David Whitmire Hearst Jr. $1.9 BILLION 26. Stewart & Lynda Resnick 27. John Tu 28. Gary Michelson $1.88 BILLION $1.6 BILLION $1.55 BILLION 5. RON BURKLE NET WORTH: $4.5 BILLION 5% LAST YEAR: $4.3 BILLION AGE: 59 RESIDENCE: BEVERLY HILLS SOURCE OF WEALTH: SUPERMARKETS, INVESTMENTS 29. George Joseph $1.37 BILLION 3. Bruce Karsh 31. Howard Marks 32. Alan Casden $1.35 BILLION $1.35 BILLION $1.3 BILLION 6. SUMNER REDSTONE NET WORTH: $4.4 BILLION 5% LAST YEAR: $4.2 BILLION AGE: 88 RESIDENCE: BEVERLY HILLS SOURCE OF WEALTH: BROADCASTING, MOVIE THEATERS 33. Michael Milken $1.25 BILLION 34. Neil Kadisha 35. Thomas Barrack Jr. 36. Marc Nathanson 37. Charles Munger $1.2 BILLION $1.1 BILLION $1.5 BILLION $1.2 BILLION 7. DO WON DON & JIN SOOK CHANG NET WORTH: $4.3 BILLION 75% LAST YEAR: $2.45 BILLION RESIDENCE: BEVERLY HILLS SOURCE OF WEALTH: APPAREL RETAILING 38. Michael Eisner 39. Frank McCourt 4. John Shea 41. Lowell Milken $1 BILLION $96 MILLION $95 MILLION $9 MILLION 8. HAIM SABAN NET WORTH: $3.35 BILLION 9% LAST YEAR: $3.7 BILLION AGE: 67 RESIDENCE: BEVERLY HILLS SOURCE OF WEALTH: TV PRODUCTION, BROADCASTING 42. Frederick Ted Field 43. Jeffrey Katzenberg 44. Robert Maguire 45. Aubrey Chernick $87 MILLION $865 MILLION $85 MILLION $84 MILLION 9. STEVEN SPIELBERG NET WORTH: $3.3 BILLION 3% LAST YEAR: $3.2 BILLION AGE: 65 RESIDENCE: PACIFIC PALISADES SOURCE OF WEALTH: ENTERTAINMENT 46. Ray Irani 47. Robert Day Jr. 48. Peter Lowy 49. Jerry Bruckheimer $8 MILLION $77 MILLION $76 MILLION $75 MILLION 1. DONALD STERLING NET WORTH: $3.25 BILLION 25% LAST YEAR: $2.6 BILLION AGE: 76 RESIDENCE: MALIBU SOURCE OF WEALTH: REAL ESTATE 5. James Cameron $65 MILLION WINNERS & LOSERS See page 36
5 36 LOS ANGELES BUSINESS JOURNAL MAY 21, 212 THE LIST Continued from page 34 WINNERS & LOSERS Do Won Don & Jin Sook Chang Steven Udvar-Hazy Donald Sterling Anthony Pritzker Tamara Hughes Gustavson +$42 MILLION +$65 MILLION +$59 MILLION +$8 MILLION +$1.85 BILLION Alec Gores +$34 MILLION Eli Broad +$3 MILLION David Geffen +$3 MILLION Patrick Soon-Shiong +$2 MILLION Ron Burkle +$2 MILLION Sumner Redstone +$2 MILLION Rick Caruso +$2 MILLION Tom Gores +$15 MILLION Andrew & Peggy Cherng +$15 MILLION DO WON DON & JIN SOOK CHANG Couple s fast-growing Forever 21 fast-fashion company shows no signs of slowing down. Michael Eisner George Joseph Steven Spielberg William Barron Hilton +$15 MILLION +$14 MILLION David Whitmire Hearst Jr. Gary Michelson Bruce Karsh Howard Marks Neil Kadisha Marc Nathanson Edward Roski Jr. +$9 MILLION John Shea +$7 MILLION A. Jerrold Perenchio +$5 MILLION DONALD STERLING Real estate investor benefited from rising value of his upscale apartments and winning L.A. Clippers. Aubrey Chernick Peter Lowy Marion Anderson & Family Stewart & Lynda Resnick Frederick Ted Field Elon Musk +$15 MILLION +$1 MILLION JOHN TU Falling price of computer memory sharply lowered value of his Kingston Technology Co. Frank McCourt Jerry Bruckheimer NEW TO LIST James Cameron -$3 MILLION Robert Day Jr. -$5 MILLION Jeffrey Skoll -$65 MILLION Jeffrey Katzenberg -$75 MILLION Robert Maguire -$8 MILLION Charles Munger -$15 MILLION Michael Milken TOM GORES Busy private equity titan made 17 acquisitions and closed deal to buy his hometown Detroit Pistons. -$18 MILLION -$2 MILLION -$25 MILLION -$28 MILLION -$3 MILLION Lowell Milken David Murdock Ray Irani Thomas Barrack Jr. Kirk Kerkorian ALAN CASDEN Breakup with partner Cerberus Capital Management took heavy toll on net worth of apartment developer. -$35 MILLION Haim Saban -$1.3 BILLION John Tu -$1.33 BILLION Alan Casden ARRIVALS DEPARTURES ELON MUSK Multitalented electric-car and aerospace entrepreneur now calls Los Angeles home. FRANK MCCOURT Dodgers $2.15 billion sale price returns him to list after absence due to divorce and team bankruptcy. JERRY BRUCKHEIMER Blockbuster king returns to list after latest Pirates installment does $1 billion at box office. JAMES CAMERON Avatar director reaps returns from residuals and rereleasing Titanic in 3-D. ALFRED MANN Biotech entrepreneur still has Mulholland mansion but now calls Las Vegas home. RONALD TUTOR Studio chief and construction tycoon hurt by falling value of Tutor Perini stock. STEPHEN BING Scion of New York real estate family appears to have had net worth overestimated in past. GEORGE RANDOLPH HEARST JR. Aging newspaper heir now spends his time at Paso Robles ranch.