The Houston-based Hanover Co., which opened its West Coast headquarters in Newport Beach in September, has completed its first set of apartment deals in Southern California. And with several other acquisitions pending, Hanover executives believe they are well on the way to reaching a target of developing $200 million annually in the Western U.S.,about a quarter of that in Orange County.
Nationally, Hanover develops around $500 million a year in new apartments, according to Jerry Davis, a former executive with JPI in Orange County who recently joined Hanover as its regional partner for West Coast operations.
“Hanover has never built on the West Coast before this,” said Davis. “But now we’re at a size where we can come out here and have an impact in this marketplace.”
Hanover now owns more than 12,000 units across the country.
“Our goal is to build 4,000 to 5,000 units a year nationally,” said Davis. “On the West Coast, the Newport Beach office has a target of building about 2,000 units at a cost of around $200 million a year.”
The privately held company was formed in 1982 and operates in 13 states.
“We have 25 to 30 active projects at any one time,” said Davis. “We’re concentrating on building in the Sunbelt and the Eastern Seaboard right now.”
Hanover hasn’t purchased any land in Orange County yet. But it is in escrow on separate deals for a pair of sites totaling 18 acres. The company plans to build more than 800 units on those parcels.
“Both are coastal sites,” said Davis. “They’ll be three- and four-story units with two levels of subterranean parking.”
The Orange County sites have been under contract since last year.
“It’s been a long closing process,” said Davis. “But now we’ve positioned ourselves to really ramp up our activity in California in 2000.”
Other projects Hanover is close to closing include:
n In northern Los Angeles County, Hanover’s Newport Beach office has concluded a deal to purchase 10 acres to build 271 apartment units. The project is expected to cost $43 million to complete.
n The company has three offers pending to buy land in Los Angeles County to build another 504 units at a cost of $90 million.
n In the East Bay area of Northern California, Hanover expects to close escrow this month on 23 acres. The developer then will build 504 apartments; the project is expected to cost $70 million. “We have other sites in Northern California that are in escrow,” said Davis.
n In Glendale, Ariz., Hanover has plans to build 298 units. The $25 million project is expected to get under way in March.
“In each case, all we do is buy land and build,” said Davis. “We don’t purchase existing apartments.”
Hanover builds floor plans ranging from one to three bedrooms. The company also builds lofts.
An average unit built by the company runs about 1,000 square feet. According to Davis, an average apartment developed by the company rents for $1,600 to $2,000 a month.
“We like the high-end markets,” he said. “That’s where we look to in terms of building.”
Davis added that Hanover would like to develop more apartments in Orange County than currently planned, “but there’s just not enough available land.”
Hanover’s Newport Beach office is the West Coast regional headquarters for the firm’s development, construction and capital market groups. The company is targeting a staff of 15 people in Orange County.
“We’d like to be fully staffed in the next 60 days,” said Davis. “But right now, we’re still interviewing and in the process of hiring more people.” n
