Dan Hedigan, the new chief executive of the master developer overseeing Irvineโs Great Park Neighborhoods and two other big projects in the state, says heโs looking to build much more than new homes on his companyโs extensive land holdings.
The company is planning โa renewed strategic approach for the 23 million square feet of planned commercial opportunities in our three communities,โ Hedigan said on March 10, during his first earnings call as CEO of Irvineโs Five Point Holdings LLC (NYSE: FPH).
โOur communities need the proper balance of retail, office, medical and apartments to complement and support our growing residential footprint,โ said Hedigan, who hails from Californiaโs best-known proponent of the work-live-play ethos in its community development, Newport Beachโs Irvine Co.
Hediganโs new company, which operates under the FivePointย name, is planning the construction of nearly 40,000 homes spread among three master-planned communities: the Great Park Neighborhoods, Los Angeles Countyโs 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 Countyโs largest landowner (see story, page 4).
He left that post, which included oversight of the companyโs 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 Emileย Haddad, who stepped down from that role last August, moving into the chairman emeritus position at the company, which began operations in 2009.
After Haddadโs change in roles, the master developerโs day-to-day operations were overseen by President and Chief Operating Officer Lynnย Jochim. She stepped down from those positions last month.
In addition, the companyโs chief financial officer, Erikย Higgins, is leaving his post shortly. A replacement hasnโt been announced yet for either Higgins or Jochim.
FivePointโs shares are off by a little more than 50% over the past three years. The companyโs valuation ran around $940 million as of last week.
Chrisย Reynolds, a managing director with Neubergerย Bermanย who tracks the company, noted during the March 10 earnings call that FivePointโs stock now trades at a โsubstantial discountโ compared to the companyโs book value.
More Irvine Sales
Irvineโs Great Park Neighborhoodsโthe first of the companyโs three mega-projects to break ground, with land sales starting in 2013โtotals 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 stateโs 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.
Moreโs in store for Irvine in the near future, according to Hedigan.
โWith the continued strong pace of home sales, we expect builders to purchase approximately 800 homesites in the fourth quarter of 2022,โ he told analysts.
Landโs 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 companyโs local project.
The next collection of homes scheduled to open at Great Park Neighborhoods is Solisย Park, a collection of 13 product types from Lennar, Pulte, Taylorย Morrison, Triย Pointeย 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 thatโs home to the local base of Broadcom, and the new City of Hope campus in the city, thereโs been limited commercial development on the companyโs 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 FivePointย 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 cityโs adjacent, 1,300-acre Greatย Park, the build-out and funding of which the developer has largely overseen. Construction work hasnโt started for FivePoint X.
Hedigan, who said he is still getting his hands around the real estate companyโs vast operations, hasnโt commented on specific plans for future phases of development at any of the companyโs projects. He did emphasize during this monthโs earnings call that non-housing development will increasingly be a focus.
Given the โlocation 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,โ Hedigan said.
FivePointโs mixed-use zoning โallows for a multitude of uses, allowing us to respond to the evolving commercial market,โ 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 companyโs San Francisco land. That could change, Hedigan suggested in the companyโs earnings call.
โWe have an irreplaceable asset in our San Francisco properties. Itโs a priority to move development of these properties forward,โ he said.ย