Residents of Dana Point’s Monarch Bay, a gated beachfront community in the northern edge of the city, have paid $225 million to buy out the ground lease to their homes.
It’s the largest reported residential land transaction in Orange County in over a year, according to brokerage data.
The deal marks the third and largest sale of the underlying land at Monarch Bay by the Moulton Co., whose namesake family is one of the county’s oldest landowners, with ties to the area that stretch back to the 1890s.
Residents in the community previously owned their home but not the underlying land, paying rent to the Moulton Co. under a 60-year land lease deal that expires this year.
Monarch Bay runs some 80 acres along the western edge of Coast Highway, near Crown Valley Parkway. It’s just north of the Monarch Bay Resort (the former St. Regis), and homeowners share a beach club with the hotel’s guests.
There are 212 homeowners in the community, which counts 214 lots; a pair of homes there are built on double lots.
The just-completed sale involved more than half of the homes at Monarch Bay; two similar but smaller transactions were completed in 2013 and 2016.
The average price paid per lot in the latest deal was about $2 million, according to Phil Immel of Pacific Sotheby’s International Realty. That’s slightly above the per-lot prices paid in 2013 and 2016.
Monarch Bay Land Association, which has been acting as a conduit between the Moulton family and the community’s homeowners, has paid close to $400 million for the land since 2013, records indicate.
“After decades of owning the land, the family is now cashed out,” said Immel, a longtime broker in the area.
Moulton Ranch Ties
The Moulton family formed Irvine-based Moulton Co. in 2007 to manage its commercial and residential holdings, mostly in Southern California. The firm is led by Jared Mathis and Scott Barnes, great-grandsons of Lewis and Nellie Gail Moulton, founders of the Moulton Ranch, which stretched about 22,000 acres from present day Lake Forest to Dana Point.
The Moulton family struck the initial ground lease in the 1960s with Laguna Niguel Corp.; management later switched over to the Monarch Bay Land Association.
In 1988, the Moulton family decided that upon the lease expiration date, homeowners would be able to purchase their lots at 65% of the appraised land value; there were subsequent disputes over those appraisals.
After the two rounds of sales in 2013 and 2016, there were about 114 remaining homeowners who had yet to purchase their land.
After the lease expired at the end of June, all but 10 of those homeowners bought their lots. The remaining renters have paid a $50,000 fee to extend their lease until the end of the year, at which point they will be required to either buy or turn over their land.
The ground lease conversion is unique, but not unheard of in Orange County.
The Monarch Bay deal is the largest reported one of its type since 2008, when the 90 homeowners of Capistrano Shores, a big stretch of beach cottages on the northern tip of San Clemente, paid close to $100 million to buy out a ground lease owned by Amherst College.
Irvine Co. has also sold leased land to homeowners in Irvine and Newport Beach, brokers note.
Uptick in Activity
Sales in the Monarch Bay community have run between $1.5 million and $9 million for homes operating under the ground lease in recent years.
That’s considerably below prices paid at Ritz Cove and other nearby waterfront communities that weren’t subject to ground leases.
Brokers that specialize in the area note that some shoppers have been deterred from Monarch Bay due to the rare leasehold situation, and the inability to own the entire property.
On the other hand, many of the original takers were drawn in by the relatively low cost to live in the gated community at the north end of Monarch Beach.
Lease rates ranged from $200 to $600 per month, according to news reports.
Even with the ground lease buyouts that have ranged between $1 million and $7 million, Monarch Bay real estate is still a comparative value, notes Villa Real Estate’s Marcia Brashier.
“It’s an exclusive, well-located area that costs a fraction of what some pay in markets like Newport and Laguna Beach,” she said.
This could also present the opportunity for new construction in the neighborhood.
“There’s no more raw land in Monarch Bay, but we could definitely see some buyers looking to rebuild,” Brashier said.
The priciest offering in the community is a $21.5 million home running some 10,900 square feet; Villa Real Estate’s John Stanaland has the listing.
The new fee simple situation provides clarity for homeowners, and has brought about a resurgence in activity for the neighborhood, Immel said.
Just one day after listing 232 Monarch Bay last month, the home went into escrow for $4.5 million, including the home and land.
Another home he’s representing at 430 Monarch Bay had six offers before it even appeared on the MLS.
Of the Monarch Bay homes on the market, some are from the 10 owners that have yet to buy their lot.
Such is the case for 430 Monarch Bay, which is listed at $8 million, including about $2 million for the underlying land.
Amenities
An interesting perk to buying in the neighborhood: there aren’t any HOA dues following a provision that was included in last year’s sale of the nearby Monarch Beach Resort.
Ohana Real Estate Investors LLC bought the 400-room property for nearly $500 million in the largest-ever hotel sale in Orange County. The sale of the 800,000-square-foot property also included the Monarch Beach Golf Links and the Monarch Bay Beach Club.
The latter, which wrapped an extensive renovation last year, is among the biggest draws for potential buyers, Immel notes. It’s used by hotel guests and members of the community.
“It’s the only private beach club on the sand in Orange County, and it’s a huge asset for residents.”
