Newport Beach-based homebuilder City Ventures LLC has bought land next to the St. Regis Monarch Beach Resort in Dana Point, where it plans to start construction on a high-end housing project later this year.
The privately held builder, one of the region’s most aggressive buyers of land since its 2009 formation, recently closed on a deal to buy a multi-acre property just off Niguel Road, immediately south of the main grounds of the upscale hotel.
City Ventures is planning a 37-home project on the land, and is expecting to break ground on the site as soon as this summer, according to Herb Gardner, president of the company’s homebuilding division.
Terms of the sale weren’t disclosed.
The builder bought land from Newport Beach-based Makar Properties LLC, according to City Ventures’ chairman, Craig Atkins.
Makar is the former owner of the five-star St. Regis Hotel, which saw a well-publicized change in ownership in 2009.
The land bought by City Ventures wasn’t pledged as collateral for the nearly $300 million in debt that was tied to the hotel and facing foreclosure in 2009. Makar retained control of the parcel, which is roughly 3 acres, after lenders took over operation of the hotel.
The new housing project is being built with the cooperation of the hotel’s current owners, Seattle-based Washington Real Estate Holdings LLC, according to Atkins.
The coastal housing development will offer access to the hotel’s amenities, as well as the private Monarch Bay Beach Club.
The homes are expected run a few million dollars, but they should be priced below other new high-end homes in the immediate area, Atkins said.
The Monarch Beach project is one of the higher-end projects undertaken by City Ventures, which over the past four years has amassed land holdings across California that could support close to 10,000 homes.
The acquisition of the land next to the hotel was one of 10 land deals—others included sites in Yorba Linda, Ventura and Encinitas—that the company closed on near the start of the year. It expects that development on the 10 properties will result in home sales approaching $370 million.
City Ventures remains on the lookout for more deals despite signs of rising land prices. It hopes to build its inventory closer to 20,000 lots over the next few years, according to Atkins.
In comparison, Irvine-based Standard Pacific Corp., which is publicly traded and ranks as the largest homebuilder based in Orange County, owns or controls close to 30,000 home lots across the country.
Irvine-based Tri Pointe Homes Inc., which just raised $233 million in an initial public offering, owned or controlled about 1,400 lots at the end of September. The company said it plans to use proceeds from its IPO to buy another 775 or so lots.
Publicly traded homebuilders increasingly have been snapping up land in Southern California and other markets, helped by their ability to raise capital quickly. That’s been a factor—along with recent increases in demand—in pushing up prices for raw land.
City Ventures—which has reported sales of more than $100 million to date, and expects to see $200 million in revenue this year—would appear to be a potential candidate to go public going forward. The builder’s backers include asset management firm Ares Management LLC and Imperial Capital LLC, both based in Los Angeles. It recently raised about $125 million in mezzanine debt from New York-based asset manager GSO Capital Partners LP, a unit of the Blackstone Group.
“We’re open to all opportunities,” Atkins said of the company’s long-term plans.
The company has prospered in part, he said, by taking on all types of for-sale housing projects, including its share of infill development projects in North Orange County.
The company is working on a 12-acre infill project in Buena Park at the site of a former city yard, where 220 homes are envisioned. The company also is looking to build on a site in Buena Park along the Santa Ana (I-5) Freeway, near the city’s former Nabisco plant, which was razed about seven years ago.
