By 1995, the Raleigh Jet Enterprise’s fleet had grown to include five jets, two Gulfstreams, two Hawkers and the original Diamond Jet. To increase liquidity, Raleigh completed the sale of its aircraft and charter operations to Petersen Publishing.
The government’s deregulation of the Savings & Loan industry drove tremendous market liquidity and growth in the real estate industry throughout the eighties. Financial institutions that previously were the source of home mortgages became the source of debt and capital for increasingly speculative development projects and investments. During the same decade, the investment firm, Drexel Burnham Lambert (“DBL”), created high-yield bonds (aka “junk bonds,”) as debt source to fund both higher risk real estate transactions and corporate growth.
This market liquidity resulted in an economic boom-time throughout the 1980’s. In 1989, however, alarmed by these financing practices, Congress re-regulated the S&L industry through the Financial Institutions Reform Recovery and Enforcement Act (“FIRREA”) and established the Resolution Trust Corporation (“RTC”) as the workout mechanism. Concurrently, government regulators dismantled the DBL firm.
The collapse of these two sources of high liquidity caused a severe recession during the early nineties. The mark-to-market policies under FIRREA resulted in the RTC take-over of nearly 450 financial institutions holding nearly $400 Billion in assets. The RTC flooded the market with properties when it commenced liquidation of these holdings. The value of both real estate and high-yield bonds collapsed, imperiling many other financial institutions, including Raleigh’s capital partner, ELIC, which was placed into conservatorship by the Insurance Commissioner for the State of California on April 11, 1991. With the failure of its capital partner, the collapse of both debt and capital availability from all financial sources and the freefall in real estate values, all during a severe recession, Raleigh’s very existence came under threat.
Raleigh faced challenges on many fronts and none of the success of the 35 previous years of operations prepared the company and its executives for this decade. Nonetheless, the company team buckled down and worked countless hours to successfully navigate the company through these perilous times.
As part of the “old guard,” Raleigh’s extensive real estate partnerships with Executive Life were closely scrutinized by the California Receivership Court overseeing the liquidation of ELIC. Despite claimed challenges to its conduct by the California Insurance Commissioner, Raleigh and its executives were found by the court to have conducted themselves with the highest levels of integrity and professionalism. Sufficiently so that Raleigh was able to play a key role in the disposition of multiple assets and was well compensated for its efforts.
Concurrently with managing the impact of the collapse of its financial partner, the team at Raleigh had to take aggressive steps to stabilize the company’s finances.
At the close of the 1980’s, Raleigh also launched a luxury furniture company, Entourage LA. The line was launched in collaboration with the company’s longstanding, resident interior designer, Tom Mahew.
In 1989, Raleigh acquired the property behind the Sunset Marquis for expansion. This project was made possible only by the prescience of the Raleigh team. Under Deborah Rosenthal’s guidance, she established expansion rights for the Sunset Marquis on this property some four years before Raleigh was even able to acquire it.
In 1989, Raleigh partnered with John Carner, owner of the Murray Plumbing Company, to undertake the development of the last grandfathered high rise on Wilshire Boulevard, the Club View Condominiums, on a site adjacent to the Los Angeles Country Club.
In 1987, the company completed its masterplan for the redevelopment of Raleigh Studios and inaugurated its new stages by hosting the epic play, The Mahabharata as part of the Los Angeles Festival. Operating under the tag line, “More than a Lot,” Raleigh Studios reimagined the concept of the independent production studio, adding hundreds of thousands of feet of stages, offices and production support space to the property. In the process, Raleigh virtually reinvented the art of soundstage construction and developed a configuration with stages and adjoining production support space that would be emulated across the globe in the coming decades.
In the mid-1980’s, the company’s ability to translate skills across various fields was evidenced by the development of the residence and vineyard, Rosenthal – The Malibu Estate. Establishing its own Malibu-appellation, the first wines from this award-winning pioneer of Southern California vintner were produced in 1990.
During the mid-1980’s, the company, despite its considerable focus on the growth of the ELIC portfolio, continued to invest in its core assets. Under Mark Rosenthal’s watchful eye, the Sunset Marquis underwent a transition from a limited-service accommodation to a full-service hotel. Renovations included a remodel of all the rooms in the main buildings and the addition of a bar and restaurant to the property. During that decade, Deborah Rosenthal laid the groundwork for the future expansion of this hotel through her leadership role and community participation in the founding of the City of West Hollywood.
In 1982, Raleigh acquired a major development site in London, an office building at 3, 4 & 5 Millbank Street, directly across from the House of Lords. Partnering with the Japanese development firm, Kumagai Gumi, Raleigh embarked upon a multi-year process to obtain development rights to convert the building into a five-star hotel, The Raleigh. By 1987, however, with the appreciation of the Pound Sterling and the value of the entitled site both having worked to Raleigh’s considerable favor, the partnership elected to sell the project.
The early 1980s also witnessed the continued expansion of Raleigh’s garden-centric hospitality theme. The company assembled multiple residential parcels adjacent to the Westwood Marquis Hotel, the old residential structures onsite, and completed the addition of an urban garden and pool area to the hotel, just in time for the 1984 Olympics in Los Angeles.