Santa Ana title insurer First American Financial Corp. is seeing activity on par with the go-go days of 2007 for business tied to the buying and selling of commercial real estate.
The company, which writes policies protecting owners of homes and other real estate from competing claims of ownership, said its commercial title business posted its strongest quarter since the peak year of 2007. It’s a bright spot compared to residential mortgages, where declines are seen through this year.
First American’s commercial title business division saw $98 million in revenue in the fourth quarter, up nearly 50% from a year earlier.
Commercial activity made up about 10% of First American’s total revenue of $1 billion in the quarter. Higher profits in the commercial unit helped the company post its strongest pre-tax profit margins—8.6%—for its core title business division since late 2006.
In all, First American earned $47 million in profits for the quarter. The figure was off about 6% from a year earlier but exceeded Wall Street expectations by nearly 50%.
The uptick in commercial real estate business is due to favorable interest rates that are spurring sales, as well as improved access to credit, according to First American. The company also cited its own marketing efforts.
Executives said on a conference call last month that they expect the trend to continue this year.
“We are confident that the commercial business will remain strong throughout 2011,” Chief Executive Dennis Gilmore said. “We saw an increase in the business all through 2010. We think that trend will continue. Time will tell on that. But we’re optimistic that this will be one of our stronger segments going into 2011.”
First American Financial emerged last year from a split of First American Corp. The split created two companies, First American Financial and Santa Ana-based Corelogic Inc., a provider of data to real estate and mortgage companies.
Shea Off Project
The University of Colorado has ended a contract with Aliso Viejo’s Shea Properties to redevelop the school’s former hospital campus in downtown Denver, according to local reports.
Shea, which counts Colorado as one of its main markets, was tapped in 2004 to redevelop the 30-acre site. Plans called for 1,200 homes, 150,000 square feet of shops and about 500,000 square feet of office space.
The school relocated its hospital campus to nearby Aurora in 2007.
The economic downturn put redevelopment on the back burner for several years, although Shea had spent a reported $6 million in rezoning and planning the site, according to the Denver Post.
Last summer, when Shea was nearing a deadline to buy property for the first phase of development, it renegotiated its contract with the school to give the developer more flexibility in lining up prospective tenants for the project.
Last month, with the developer still unable to start work, the school reportedly ended its contract with Shea.
The university now is searching for another developer to take over the project, officials said.
Residential
Irvine-based homebuilder California Coastal Communities Inc. appears to be on pace to exceed lender-mandated home sales requirements for its Brightwater project in Huntington Beach.
The company, which is emerging from bankruptcy, has its Hearthside Homes Inc. division handling development of the 356-home Brightwater project near the Bolsa Chica wetlands.
California Coastal had its latest plan of reorganization signed off by a Santa Ana federal bankruptcy judge late last month. The homebuilder filed for Chapter 11 bankruptcy protection in late 2009, owing more than $180 million to lenders and other creditors.
Emerging from bankruptcy this month, California Coastal has a new, $15 million line of credit that’s expected to fund day-to-day operations.
It also is set to see an existing $82 million line of credit converted to a second lien, while a onetime $100 million loan would be converted to a $44 million third lien along with shares in the company.
Luxor Capital Group LP, a New York-based hedge fund operator, is providing much of the new funding, along with New York’s Anchorage Capital Group LLC and Bank of America Corp.
The re-worked loans come with terms that mandate minimum sales requirements for California Coastal in the next four and half years, starting with 10 sales within the next year and a half. Annual sales then must top 20 to 30 homes annually.
If recent trends hold up, that shouldn’t be a problem.
California Coastal has sold 10 Brightwater homes so far this year, according to Chief Executive Raymond Pacini.
The company recently started building another eight homes at the project.
“We are excited about the future,” Pacini said in a recent release.
