Emile Haddad is something of a rarity these days: a developer who’s rode through the downturn and is moving ahead with one of the biggest planned master developments in the county.
“We’re still in the deal,” said Haddad, chief executive of Aliso Viejo’s Five Point Communities LLC.
The deal is Irvine’s Great Park, a proposed redevelopment of the former El Toro Marine base that initially calls for some 5,000 homes, stores, offices, parks, museums and other uses.
The name of the developer behind the Great Park has changed, but Haddad has remained a constant.
He led Miami-based Lennar Corp.’s $1 billion buy in 2005 of the former Marine base and now oversees the project at Five Point, which split off from Lennar in 2009.
Lennar, which has operations in Aliso Viejo, owns a majority of Five Point.
Haddad and Five Point stayed at the helm after a recent shakeup in ownership for the project.
Boston’s State Street Bank & Trust Co. led a financial reworking that saw it pay a reported $153 million for a $775 million mortgage held by bankrupt Lehman Brothers Holdings Inc.
Existing investors, including Lennar and Michael Dell, put another $200 million in the refinancing.
State Street then cut the project’s outstanding mortgage from some $650 million to $200 million and gave Five Point a $180 million line of credit.
The deal clears up any worries about Five Point losing control.
Not too many other big developers here can say the same, other than Irvine Company or Rancho Mission Viejo LLC, which long have owned and controlled land for their projects.
The Great Park project is one of the few in the country “to be taken out of the quicksand of yesterday’s (financial) problems,” said Haddad, who formerly was chief investment officer at Lennar.
“It’s a new chapter, and a new day,” he said.
Other projects here haven’t played out the same way.
Aliso Viejo-based Shea Properties pulled out of plans to redevelop Tustin’s former Marine base last year after failing to come to terms with the city on a development timetable and other issues.
Irvine’s SunCal Cos. has lost projects in the Bay Area and New Mexico and faces uncertainty about others, including San Clemente’s Marblehead.
Marblehead and others backed by Lehman Brothers remain in limbo as the failed investment bank’s bankruptcy works through the courts.
It was a battle to keep the Great Park, according to Haddad.
“There were a lot of times we weren’t sure what would happen,” he said. “We were in the middle of the world of Lehman.”
There were “lots of flights back” to the East Coast, Haddad said.
He called it “the toughest waters I’ve been through in my career.”
State Street emerged as the Great Park’s white knight. The bank acquired part of Lehman’s investment in the Great Park prior to its 2008 bankruptcy.
State Street is “very supportive of the project and the management team,” Haddad said.
He called them a “long-term lender.”
Prior investors, said to include Dell’s MSD Capital LP, Rockpoint Group LLC and Blackacre Institutional Capital Management LLC, also are sticking with the project, Haddad said.
One initial investor, Cerberus Capital Management LP, sold its stake to Lennar, according to the Wall Street Journal.
Plans Submitted
The plan now is to start building.
Thousands of pages worth of plans for the first phase of what’s now called the Great Parks Neighborhoods project were submitted to the city last week.
Plans for that phase call for 4,985 homes and 1.2 million square feet of commercial, retail and other space.
A timeframe for hearings on Five Point’s plans haven’t been finalized. Haddad said he’s hoping approvals will be in place to start early work before the next rainy season.
The goal now is to have the first homes—likely to be built between Portola Parkway and Irvine Boulevard next to the Eastern (133) Toll Road—sold and occupied in 2013.
Five Point hopes to have the nearly 5,000 homes built and sold in eight to 10 years.
Alongside housing and commercial construction, the city of Irvine said it is pushing ahead with its portion of the redevelopment, the 1,347-acre Orange County Great Park.
That part of the project has seen modest work since 2005. A bulk of the park’s construction is set to be financed by taxes from home sales and development fees from Five Point’s side.
The park has seen its share of detractors amid questions on funding, aesthetics and a lack of progress.
Larry Agran, chairman of the Orange County Great Park Corp. board who conceived of the project as a way to block an airport at the former base, said critics should remember the city sold the land for $1 billion in 2005.
“We caught the market at absolutely the right time,” Agran said.
The deal is the second big financing coup in the past year or so for Five Point, which is 60% owned by Lennar with Haddad owning the rest and holding operational control.
In late 2009, Five Point also took over the newly refinanced Newhall Land Development in Santa Clarita Valley.
The project went into bankruptcy in 2008. Lennar was able to financially rework the 12,000-acre development and kept control.
A battling nature—forged during Haddad’s youth in Lebanon—helped keep the Great Park and Newhall projects afloat, he said.
“That was my commitment when I started (Five Point),” Haddad said. “These projects are great projects—we decided to get in the trenches.”
