(Updates with quotes, details)
MIAMI, Sept 17 (Reuters) - One of America's landmark homes, the Miami Beach mansion that once belonged to Italian fashion designer Gianni Versace, was sold at an auction on Tuesday for $41.5 million to a business group that includes the owners of the Jordache jeans brand.
The 1930s-era Mediterranean-style estate, which has 10 bedrooms, 11 bathrooms and a pool inlaid with 24-karat gold, was auctioned off as part of a bankruptcy proceeding by its current owner, telecom magnate Peter Loftin.
Bidding opened at $25.5 million and the winning offer was made by the current mortgage holders of the property, VM South Beach, a company affiliated with New York's Nakash family, which controls Jordache Enterprises.
The group beat out two other bidders, including billionaire Donald Trump and a Florida developer who owns the Palm Beach Polo and Country Club.
Potential buyers participated in a poolside auction at the three-story mansion on Miami's Ocean Drive. The property is now known as Casa Casuarina.
The Nakash family jointly owns a hotel next door to the mansion with the Gindi family, who founded the Century 21 department store chain. They plan to consolidate the properties to create a hotel that will possibly carry Versace's name.
Joe Nakash told reporters he planned to ask Versace's family for permission to name the new property the Versace Hotel Villa.
"Everything will stay as is," he said. "It's history, every day you see how many people take a picture of this place."
Bidders were required to sign a confidentiality agreement and meet financial requirements that included a $3 million deposit and proof of funds to pay at least $40 million. The sale was a cash transaction.
The 23,000-square-foot (2,137-square-metre) mansion, replete with hand-painted frescoes, Italian marble and a gold-and-marble toilet, has been the subject of a long legal battle.
In 1997, Versace was gunned down at the mansion's entrance gate by serial killer Andrew Cunanan. Three years later, Versace's family sold the property to Loftin, who is now facing bankruptcy and who had been trying to sell the house for more than a year.
The property was initially listed on the market with an asking price of $125 million. The price was later lowered to $75 million before it wound up in bankruptcy proceedings.
In recent years, the mansion had been used as a private club and a boutique hotel.
Versace bought the property in 1992 for $2.9 million. He then purchased a hotel next door and spent $33 million on renovations to add another wing.
Inside, he decorated with an over-the-top style that included paintings of Grecian, nymph-like characters playing lyres under palm trees. The snake-haired Medusa head, Versace's logo, can be seen throughout the house.
When Versace owned the property, he helped usher in a renaissance of Miami's South Beach. His presence attracted models, jet-setters and celebrities including Sylvester Stallone and Madonna, who also bought homes in Miami.
The former Versace mansion was originally built by Standard Oil heir Alden Freeman. It was modeled after the Alcazar de Colon palace built in the Dominican Republic in 1510 by the son of Christopher Columbus. (Additional reporting by Zachary Fagenson; Editing by Cynthia Osterman, Vicki Allen and Tim Dobbyn)
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