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Lyon Lead for Next Great Park Homes Leg

William Lyon Homes (NYSE: WLH) has been tapped to build one of the most unique home developments in Orange County in several years, a 536-unit project at Great Park Neighborhoods in Irvine with a large number of affordably priced homes.

The Newport Beach-based builder recently paid $166 million for 33 acres on the western edge of the former El Toro Marine base, or $5 million per acre and about $310,000 per home lot.

Last month Great Park Neighborhoods master developer FivePoint Communities Inc. in Aliso Viejo disclosed it sold the land for the project but didn’t immediately announce the builders involved.

William Lyon’s project is the largest unique development yet at Great Park Neighborhoods that will feature just one builder. About half of the nearly 9,500 home lots the community is entitled for have been built or bought by homebuilders.

Among the seven product lines planned for William Lyon, an area referred to in city filings as District 1 West, are some of the smallest and most affordable homes in Irvine in years. Units are as small as 654 square feet and will be priced at about $350,000, according to Chief Executive Matthew Zaist, who said the largest will be 2,800 square feet and top $1 million.

Nearly 70% of the offerings should qualify for Federal Housing Administration financing, Zaist said. FHA limits for single-family OC homes are about $680,000.

The builder hasn’t yet announced design features. Zaist said most homes will include private yards, and that the project will largely be two-story and three-story homes that should be for sale around year-end.

Local Land Presence

The deal is William Lyon’s largest reported OC land acquisition in over a decade.

“With our headquarters (in OC), it’s important that we have a presence in the area,” Zaist said.

The company had 15 active projects here at the start of the year, ranging from high-end condos at Dana Point’s Grand Monarch community, to $2 million to $3 million homes at Ladera Ranch’s Covenant Hills community, to more affordable offerings at the Rancho Mission Viejo master-planned community.

Ovation at Flora Park, a Cypress housing development targeting the active-adult market, opened models on June 16. Homes will range from $720,000 to $846,000, according to the builder’s latest annual report.

The 244-unit development is among the first in the country under William Lyon’s Ovation brand for homebuyers older than 55, one of the fastest-growing home-buying segments.

William Lyon wants to differentiate Ovation offerings from other adult communities, such as larger ones centered around golf courses, “by cultivating an appealing brand lifestyle for 55-plus buyers who prefer a more intimate, unconventional and contemporary residential environment,” the company said when it announced the brand.

At Flora Park, “we packed a ton into its recreational facilities,” including swimming pools, a clubhouse and outdoor resort-like amenities, Zaist said.

There were more than 30 presales at Flora Park in about the past five weeks, he said.

RSI Reach

The Irvine land buy comes a few months after William Lyon completed a different type of acquisition, that of another Newport Beach-based builder, RSI Communities. The $460 million deal closed in March.

RSI has large land holdings in the Inland Empire and in Texas, the latter a new market for Zaist’s firm. It owned or controlled more than 11,000 lots at the time of its sale, bringing William Lyon’s land holdings to more than 28,500.

RSI, founded by local entrepreneur Ron Simon, made its mark building precision-manufactured houses that can be assembled faster and more efficiently than traditional methods. The processes won’t be on display during construction of the affordable Great Park homes; Zaist said RSI’s homebuilding capabilities are best employed on large-scale projects where its plans can be duplicated.

“It’s hard to adapt that (process) to the coast,” where he said the limited amount of developable land forces builders to be creative in designing and planning.

That particular creativity is one reason OC is a homebuilding hotbed. Several companies are based here, and Lennar Corp., the country’s largest builder by sales, has a big operations hub in the region.

“There’s great intellectual capital here,” Zaist said. “It’s a think tank for housing.”

Upward Trend

Continued strength in the country’s housing market has boosted William Lyon’s fortunes over the past five years, and the RSI acquisition and Great Park deal should help seed its growth plans.

In 2013, William Lyon sold 1,360 homes for about $500 million. Sales have increased every year since, and last year it reported 3,239 home closings and $1.8 billion in sales.

“I’m very proud of that growth,” said Zaist, who’s been with the company since 2000 and assumed the chief executive role in 2016.

The homebuilder’s optimism, combined with a strong April for U.S. new-home sales at more than 12%, and a robust Fed forecast of 4% growth in gross domestic product, has given William Lyon shares a short-term boost, up about 5% this month, to about $25. Its market value is about $940 million

Based on statements made on the company’s last earnings call, William Lyon now projects 4,400 to 4,750 home closings this year, generating revenue of $2.2 billion to $2.3 billion.

“I think we can build up to 6,000 units in the next few years,” Zaist said.

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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