Behind the luxury, Oheka Castle faced financial struggles
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Oheka Castle, the wedding palace owned by Long Island power broker Gary Melius, has faced financial struggles in recent years.
Melius negotiated a modification of Oheka's $27.9-million mortgage loan and received a five-year extension in August, according to Trepp, a Manhattan-based company that tracks commercial mortgages. A year earlier, Melius defaulted on the loan when it came due, Trepp reported.
The complexities of Oheka's finances are not immediately evident to visitors who marvel at its luxurious interiors and expansive views.
The Huntington estate hosted the 2010 wedding of then-Rep. Anthony Weiner and Huma Abedin, a close aide to Hillary Clinton, officiated by former President Bill Clinton. Former Sen. Alfonse D'Amato and singer Kevin Jonas of the Jonas Brothers are among the celebrities who have been married at Oheka. Named for the initials of its former owner, Otto H. Kahn, Oheka's website advertises suites for up to $1,095 a night.
During the 1920's Gilded Age, Kahn -- a financier and philanthropist -- threw lavish parties at the 127-room estate, where he hosted royalty, heads of state and Hollywood celebrities.
Reportedly the country's second-largest private residence at 109,000 square feet, Oheka was in shambles when Melius bought the French-style castle in 1984 for $1.5 million. He sold it to a Japanese businessman in 1988 for $22 million, started leasing it back in 1993 and took back full ownership a decade later. In 2012, Melius told Newsday he had spent $37 million restoring it.
Oheka's 2007 mortgage is part of a package of loans that were securitized and sold to investors. When Melius got his extension last year, the loan was split into two pieces -- a $22.75-million portion whose investors get first priority in getting repaid, and a $5.14-million portion with lower priority, Trepp reported.
The property's net operating income was $1.55 million in the first nine months of 2013, Trepp reported. If business continued at that pace through the end of the year, Oheka would have generated net operating income of just over $2 million in 2013.
By comparison, Oheka's net operating income was just under $2.6 million in 2010 and nearly $2.8 million in 2009, Trepp reported.
In an interview with Newsday in 2012, Melius said Oheka's performance for the year was on track to be the best in its history. He disputed a data report by Bloomberg indicating that the property's finances were in decline.
He also cast doubt on appraisals showing that Oheka's value had fallen.
When Melius took a mortgage on Oheka in 2007, the property's value was pegged at $43.8 million, according to Trepp. Morningstar Credit Ratings estimated its value at $30 million in 2012.
At the time, Melius dismissed that valuation.
"It's like having the Hope diamond," Melius said in 2012. "What do you appraise it next to?"