Dan Hedigan, the new chief executive of the master developer overseeing Irvine’s Great Park Neighborhoods and two other big projects in the state, says he’s looking to build much more than new homes on his company’s extensive land holdings.
The company is planning “a renewed strategic approach for the 23 million square feet of planned commercial opportunities in our three communities,” Hedigan said on March 10, during his first earnings call as CEO of Irvine’s Five Point Holdings LLC (NYSE: FPH).
“Our communities need the proper balance of retail, office, medical and apartments to complement and support our growing residential footprint,” said Hedigan, who hails from California’s best-known proponent of the work-live-play ethos in its community development, Newport Beach’s Irvine Co.
Hedigan’s new company, which operates under the FivePoint name, is planning the construction of nearly 40,000 homes spread among three master-planned communities: the Great Park Neighborhoods, Los Angeles County’s Valencia and the Candlestick/SF Shipyard sites in San Francisco.
Exec Changes
Hedigan previously served as president of land sales and homebuilding at Irvine Co., Orange County’s largest landowner (see story, page 4).
He left that post, which included oversight of the company’s in-house homebuilder, Irvine Pacific, last year. He was named CEO at FivePoint a little more than a month ago.
He takes over the CEO position from FivePoint founder Emile Haddad, who stepped down from that role last August, moving into the chairman emeritus position at the company, which began operations in 2009.
After Haddad’s change in roles, the master developer’s day-to-day operations were overseen by President and Chief Operating Officer Lynn Jochim. She stepped down from those positions last month.
In addition, the company’s chief financial officer, Erik Higgins, is leaving his post shortly. A replacement hasn’t been announced yet for either Higgins or Jochim.
FivePoint’s shares are off by a little more than 50% over the past three years. The company’s valuation ran around $940 million as of last week.
Chris Reynolds, a managing director with Neuberger Berman who tracks the company, noted during the March 10 earnings call that FivePoint’s stock now trades at a “substantial discount” compared to the company’s book value.
More Irvine Sales
Irvine’s Great Park Neighborhoods—the first of the company’s three mega-projects to break ground, with land sales starting in 2013—totals about 2,100 acres.
It is currently designed to include 10,500 homesites, though FivePoint officials have suggested that figure could ultimately increase, given the state’s need to boost its stock of affordable housing.
At the end of 2021, 7,099 home lots at the Great Park Neighborhoods had been sold to builders, and FivePoint reported 655 home sales on its land in 2021, which is an 11% increase compared to 2020.
FivePoint officials say its land was responsible for 21% of new home sales in Orange County last year.
More’s in store for Irvine in the near future, according to Hedigan.
“With the continued strong pace of home sales, we expect builders to purchase approximately 800 homesites in the fourth quarter of 2022,” he told analysts.
Land’s been trading around $5.5 million an acre or so at the project over the past year, and builders have been paying roughly $440,000 per home lot, over the same time.
A heavy amount of land and infrastructure work is now underway near Irvine Boulevard, for future phases of homes at the company’s local project.
The next collection of homes scheduled to open at Great Park Neighborhoods is Solis Park, a collection of 13 product types from Lennar, Pulte, Taylor Morrison, Tri Pointe Homes, and Trumark, according to FivePoint.
The mix of attached and detached homes is scheduled to open this year and will have homes ranging from about 1,000 square feet to 3,000 square feet.
Other Uses
Outside of the FivePoint Gateway office complex that’s home to the local base of Broadcom, and the new City of Hope campus in the city, there’s been limited commercial development on the company’s land in Irvine.
Retail and mixed-use offerings have been touted for future phases at the Irvine project; Haddad had previously championed a European-style project dubbed FivePoint X, with homes or apartments located on top of shops and restaurants.
That project was conceived to be built close to some of the facilities at the city’s adjacent, 1,300-acre Great Park, the build-out and funding of which the developer has largely overseen. Construction work hasn’t started for FivePoint X.
Hedigan, who said he is still getting his hands around the real estate company’s vast operations, hasn’t commented on specific plans for future phases of development at any of the company’s projects. He did emphasize during this month’s earnings call that non-housing development will increasingly be a focus.
Given the “location of and growing population within our communities, and the investments we have made in infrastructure and amenities, we are seeing increased interest for our commercial land holdings,” Hedigan said.
FivePoint’s mixed-use zoning “allows for a multitude of uses, allowing us to respond to the evolving commercial market,” he added.
LA, SF
Elsewhere in the state, FivePoint officials said that in the last quarter of 2021 it sold 643 homesites at its Valencia project, at a base purchase price of $167.3 million, or roughly $260,000 a lot. In total, it has sold 1,866 lots to builders at the LA County project, which is still in the early stages of development.
Work has yet to move ahead on the company’s San Francisco land. That could change, Hedigan suggested in the company’s earnings call.
“We have an irreplaceable asset in our San Francisco properties. It’s a priority to move development of these properties forward,” he said.
