You Can Buy a Santa Fe Estate for $10 Million Less Than It’s Worth

(Bloomberg) -- Robert Knutson, a founder and the retired chairman and chief executive officer of the Education Management Corp., took his company public in 1996. A decade later, it was acquired for $3.4 billion by a consortium of private equity firms led by Goldman Sachs Group Inc. In 2009, the company went public again, this time with a valuation of about $2 billion. (It's since been reacquired. A 2010 Bloomberg article reported that Knutson had made $132.4 million in stock sales from his company.)

In the meantime, Knutson was busy buying houses with his wife Miryam.

“Over the years, we [acquired] a lot of residential properties,” he says. “One in western Pennsylvania, one in Durango, Colo., and one in Boca Grande, Fla.”

In 2004, they added to their portfolio a dilapidated historic mansion set on 11.3 acres, a four-minute drive from downtown Santa Fe, N.M., which they say they purchased for about $3.5 million.

Restoring the House

“It was built in the 1930s for John Dempsey, who later became the governor of New Mexico,” says Miryam Knutson.

Dempsey sold it to an heir of the Weyerhaeuser timber fortune. The house then passed through two owners until it was purchased by yet another heiress, a member of the family that had founded the Italian beverage company Martini & Rossi. She, Knutson says, was lax at maintaining the home.

When the Knutsons visited, Miryam thought it would take years to restore. “But my husband said ‘Oh no, it will just take a year.'”

Ultimately, it took four years—and, the couple says, an additional $18 million. “We got the best architect who specialized in Pueblo Revival houses and then got curators to work with us to restore the house to perfection,” Miryam continues. “There are 64 kinds of windows in the house, and every single one is different and had to be special-ordered.”

They redid the roof, walls, plumbing, electricity, and security system, plus heating, ventilation, and air conditioning. They also restored the interior wood ceilings and finishes, rebuilt the fireplaces, and then set to making exterior improvements. “We built magnificent stone walls across the property,” she says. “And we hired somebody to trim every tree on the property for three years.”

During that time, the couple moved in to enjoy the house, holding giant parties and fundraisers for the community, where she serves on the board of the Santa Fe opera.

Recently, however, Robert has suffered from health issues, and the couple relocated to Los Angeles. They've decided to sell all their other houses, and have listed the Santa Fe residence for $11.5 million with Barker Realty, an affiliate of Christie's International Real Estate.

Given that they put in $18 million, and the house cost a further $3.5 million, the asking price means that the Knutsons plan to take a $10 million loss. “All told, inside and outside, we did more than we should,” Robert says. “But we weren't planning on selling it, ever.”

The Property

In total, the residence has 12,208 square feet of interior space. The main house has six bedrooms, including two master suites, and each of the three guest houses has bedrooms, bathrooms, and a kitchen.

The couple added a tennis court to the property, as well as a large swimming pool. Numerous covered and uncovered terraces and balconies overlook manicured grounds. “I'm a big gardener, and we have the most glorious gardens you'll see in Santa Fe,” Miryam says. 

To irrigate the land, they buried three 50,000-gallon catchment tanks, including one under their orchard. “We didn't want to be in the paper as big users of city water,” Robert explains.

He says that when they were installing one of the tanks, they found a rock with a shell embedded in it, a relic from millions of years ago, when what is now Santa Fe lay under the ocean.

While the house is filled with museum-quality furnishings, the Knutsons are downsizing from four houses to one, so they plan to sell some furniture. “My husband is an extraordinary collector of rugs,” she says. “So what we're doing is trying to pick our most-favored pieces to put in our new house, which is about 15,000 square feet,” she continues. “But we are going to have to sell some furniture, and it's killing us.”

“We're selling four magnificent properties we adore,” she says. “But we hope to create another one.”

To contact the author of this story: James Tarmy in New York at jtarmy@bloomberg.net.

To contact the editor responsible for this story: James Gaddy at jgaddy@bloomberg.net.

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