Oheka Castle goes to auction this month. Who will bid on it?

As Oheka Castle readies for its best and final offer, the auctioneer expects to see three types of bidders.

Some will be developers. Some, titans of hospitality. And then there are the property collectors, said Chad Roffers, CEO and co-founder of Concierge Auctions, which is running the auction later this month in Manhattan.

The third category, Roffers said, covers those who collect "one-of-a-kind properties."

“Some people are into art, some people are into horses, some people are into wine, watches," Roffers said in an interview. "We have a following of high net worth people that real estate is just their passion.”

The one-time estate of investment banker Otto H. Kahn, Oheka Castle was built between 1914 and 1919. The 21-acre property, its name a play on Kahn’s initials, is nestled in the Cold Spring Hills neighborhood, just north of Jericho Turnpike and next to Cold Spring Country Club.

The property has had several iterations, including as the Eastern Military Academy for 30 years beginning in the 1940s. It has played an opulent backdrop on screen, appearing in the opening scene in "Citizen Kane" and, decades later, the music video for Taylor Swift's "Blank Slate." Gary Melius purchased the castle in 1984 and restored it into a premier hotel and catering hall. 

The auction of the property, development rights and hospitality operations is set for Oct. 27 at 10 a.m. at the Dominick Hotel in Manhattan, downtown on Spring Street, federal court filings show.

Kahn Property Owner LLC filed for Chapter 11 bankruptcy protection from creditors last year to prevent a foreclosure. Melius, 82, has an ownership stake in the entity that controls the LLC, filings show.

Melius owes up to $70 million to creditors, an attorney for the LLC has said. Melius told Newsday last month "my debt is too heavy."

“I’ll take anybody,” he said in an interview Friday. Asked who he'd like to see take over, he responded: “Just say I’m having discussions with different people. That’s it.”

Whoever buys the property will have the option of building a four-story, 95-unit condominium project on the estate's grounds. In 2023, the Huntington Town Board approved an additional use permit to allow housing there. The development potential, real estate experts have said, holds key value. 

A 'sophisticated buyer'

A listing on the auction house's website markets Oheka as "a real-life Gatsby estate" and "one of the rarest trophy properties in the country." It notes that a developer can build the residences over 5 acres on the property's southeast corner.

Roffers said he will tap his curated customer database, with more than a million contacts. That includes 16,000 previous customers, including 267 billionaires who have bought and sold with his company, Roffers said.

The company has managed high-profile auctions. In 2024, La Dune, an oceanfront estate in Southampton, sold at auction for an "all-in" price of $88.48 million, Newsday has reported. In 2022, The One in Bel Air, California, sold for $141 million, according to the company.

Nicholas Campasano, a partner with real estate company The Agency Long Island, said he expects to see savvy investors, hospitality groups, developers, private equity firms and ultrahigh net worth buyers who are "just looking for trophy assets." 

A potential buyer will weigh several factors — the acreage, number of rooms, square footage and history behind it.

"If you’re looking at it from a development lens, you're looking at the cost of the project, the cost of holding it and any unexpected risks," he said. "A sophisticated buyer is someone that is going to look at all of this and determine what’s the best use, what’s a realistic use and what likely can be accomplished.”

The housing development rights are “one of the most attractive" options, said Mike Florio, CEO of the Long Island Builders Institute, a trade group for builders and developers. Florio believes “luxury residential” developers are the most likely to bid on Oheka.

“The right buyer is someone who is going to be able to see the value in both the luxury residential, maybe coupled with premier hospitality,” he said. 

Economy, neighbor relations 

Joan Cergol, a former Huntington councilwoman who worked as a public relations consultant for Oheka between 1996 and 2001, has written two books about the castle.

One of the best things to come out of Oheka’s modern history, she said, is the relationship Melius nurtured with the neighborhood. There were castle tours for children, Easter egg hunts, Halloween parties and July Fourth events.

Oheka is central to the Huntington community, she and neighbors have said.

“It really is a historic treasure and has tremendous history," she said. "It would be very sad if it becomes a private affair, member-only, admitted-only property." 

Buyers could include hedge funds interested in developing condos, a boutique hotel chain or a catering company, said Lawrence Levy, executive dean of Hofstra University's National Center for Suburban Studies.

“It would be broadly appealing once the economic backdrop improves in terms of being able to borrow to finance construction, and purchasing,” he said.

“The highest and best use for an investor — not to say it’s the highest and best use for humanity, much less the neighbors — is if you can get permission to put up a couple of hundred condos up alongside a first-rate golf course, with a backdrop with one of the nation’s most iconic residences,” Levy said.

But he said a developer's dream could take years to realize. 

“Whether you can get that type of approval is another matter,” he said. “The moon and the stars, the economy and local attitudes toward development would all have to align.”

Newsday's Sam Kmack contributed to this story.