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Tuesday, Dec 6, 2022
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OC’s Wealthiest Resets: Stock Hits, Rents Up

Economy: 39 billionaires; net worth totals $143.4B

Think your stock portfolio’s taken a beating over the course of 2022? Spare a thought for Ernest Garcia II, owner of Tempe, Az.-based used car dealer DriveTime Automotive.

Garcia, an Arizona resident who sources say has a secondary home in Newport Coast, counted a fortune that national reports pegged at over $20 billion last August, due to his large stake in Carvana Co. (NYSE: CVNA), an online platform for selling used cars and making auto loans that went public in 2017.

The company is known for having a no-haggle pricing policy, and glass vending machine towers for its vehicles.

Carvana was spun out of DriveTime and is led by Garcia’s son, Ernest Garcia III, who is not reported to have any OC ties. The company’s stock saw a huge run-up in price from March 2020 through mid-2021, at one point topping $60 billion.

The elder Garcia, with a fortune the Business Journal estimated last July at around $18.5 billion, was No. 1 on the 2021 list of OC’s Wealthiest, displacing longtime list-topper Donald Bren, Irvine Co. chairman.

What a difference a year makes: Carvana’s stock has tumbled over 95% since its 2021 peak, resulting in one of the largest and fastest declines of any billionaire’s fortunes in recent memory.

Along with the broader market sell-off for tech stocks, recent declines for Carvana came as “investor demand cooled for its customer loans, a major source of revenue,” noted a report last week in the Wall Street Journal.

The Business Journal’s latest estimate for the wealth for the elder Garcia is now $4 billion; he was reported to have sold off more than $3.5 billion of Carvana stock prior to its steep decline in price. He’s one of 11 “Weekend Wealthy” entries in this week’s edition of the Business Journal’s wealth ranking, due to having a secondary home or homes in the area.

 

$1.25B Threshold

The losses Garcia faced are emblematic, albeit far more pronounced, than the hits likely taken over the past year by many on the OC’s Wealthiest list, the centerpiece of this week’s edition.

The 39 entries on this week’s list—each with wealth topping $1.25 billion, up from a baseline of $1 billion a year ago—count a cumulative fortune we estimate at $143.4 billion.

That figure’s a bit larger than the GDP of Morocco, the world’s 60th-largest economy.

This year’s cumulative total is down $14.6 billion from a year ago, despite having two more entries. The Business Journal lowered the estimates for 16 entries on the latest list.

For entries believed to have much of their fortunes invested in stocks and related portfolios, the Business Journal made corresponding adjustments; the S&P 500 index is down nearly 10% year-over-year.

For entries of execs on the list whose fortunes are directly tied to the stocks of the companies they founded, declines of more than 10% are prevalent.

 

Apartments in Overdrive

While the stock market’s been rough of late, there’s rarely been a better time to be an apartment owner, and this week’s list includes higher estimates for several entries, such as Irvine Co.’s Bren (65,000 rental units) and Olen Properties’ Igor Olenicoff (17,000 units), whose portfolios are seeing strong rental growth and price appreciation.

Over the past year, “valuations of the type of real estate Olen owns went through the roof,” said Olenicoff, whose company also counts a large portfolio of low-rise office space in OC (see page 26).

The Business Journal’s latest estimate of $18.2 billion for Bren takes into account rising valuations for apartments, gains that have likely offset any losses seen in other areas.

It’s the Business Journal’s highest-ever valuation for the wealth of Bren; see page 22 for more.

 

Special Report

Individual entries for those on the list are included in the OC’s Wealthiest Special Report, which starts on page 15.

Additional stories on those execs and their businesses, as well as stories relating to OC’s growing stature as a hub for luxury living, can be found throughout this week’s edition.

 

OC’s Wealthiest Criteria

 

The Business Journal’s goal is to give readers accurate, impartial, and verifiable estimates of wealth for those on the OC’s Wealthiest list.

While determining wealth is admittedly as much an art as it is a science, we feel comfortable with the inclusion of every entry in this edition and have gone above and beyond to provide readers with solid reasoning behind each entry, and their estimates.

We’ve spent months looking into each entry’s holdings, company assets, public records and press clippings.

We’ve spoken with numerous trusted sources—including wealth managers, knowledgeable real estate owners and heads of family offices, among others—to get insight into investment trends, asset allocation, tax implications, philanthropic efforts and other factors that determine our estimates.

Impartial, third-party experts are used to verify our estimates.

Some individuals on our list cooperated with us to provide guidance for our estimates. Others declined. A few have told us they would prefer not to be on the list at all.

As always, our listing comes with caveats. Like Forbes, Bloomberg and other similar listings, our numbers are conservative, ballpark figures. We’ve done our best to catalog assets, but only the people on our listing know their true value.

Nor is our listing all-inclusive. We’ve done our best to track down those who we believe are OC’s wealthiest people. We are sure to have missed people and we look forward to your comments.

—Mark Mueller

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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