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Mixed-Use Focus For New FivePoint CEO

Dan Hedigan, the new chief executive of the master developer overseeing Irvineโ€™s Great Park Neighborhoods and two other big projects in the state, says heโ€™s looking to build much more than new homes on his companyโ€™s extensive land holdings.

The company is planning โ€œa 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 Irvineโ€™s Five Point Holdings LLC (NYSE: FPH).

โ€œOur 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 Californiaโ€™s best-known proponent of the work-live-play ethos in its community development, Newport Beachโ€™s Irvine Co.

Hediganโ€™s 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 Countyโ€™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 Countyโ€™s largest landowner (see story, page 4).

He left that post, which included oversight of the companyโ€™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 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 Haddadโ€™s change in roles, the master developerโ€™s 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 companyโ€™s chief financial officer, Erikย Higgins, is leaving his post shortly. A replacement hasnโ€™t been announced yet for either Higgins or Jochim.

FivePointโ€™s shares are off by a little more than 50% over the past three years. The companyโ€™s 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 FivePointโ€™s stock now trades at a โ€œsubstantial discountโ€ compared to the companyโ€™s book value.

More Irvine Sales

Irvineโ€™s Great Park Neighborhoodsโ€”the first of the companyโ€™s three mega-projects to break ground, with land sales starting in 2013โ€”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 stateโ€™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.

Moreโ€™s in store for Irvine in the near future, according to Hedigan.

โ€œWith 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.

Landโ€™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 companyโ€™s 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 thatโ€™s home to the local base of Broadcom, and the new City of Hope campus in the city, thereโ€™s been limited commercial development on the companyโ€™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 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 cityโ€™s adjacent, 1,300-acre Greatย Park, the build-out and funding of which the developer has largely overseen. Construction work hasnโ€™t started for FivePoint X.

Hedigan, who said he is still getting his hands around the real estate companyโ€™s vast operations, hasnโ€™t commented on specific plans for future phases of development at any of the companyโ€™s projects. He did emphasize during this monthโ€™s earnings call that non-housing development will increasingly be a focus.

Given the โ€œlocation 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.

FivePointโ€™s mixed-use zoning โ€œallows 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 companyโ€™s San Francisco land. That could change, Hedigan suggested in the companyโ€™s earnings call.

โ€œWe have an irreplaceable asset in our San Francisco properties. Itโ€™s a priority to move development of these properties forward,โ€ he said.ย 

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Mark Mueller
Mark Mueller
Mark is the former Editor-in-Chief and current Community Editor of the Orange County Business Journal, one of the premier regional business newspapers in the country. Heโ€™s the fifth person to hold the editorโ€™s position in the paperโ€™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 Journalโ€™s subscribers, which includes most of OCโ€™s major corporate and community players. Markโ€™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 editorโ€™s position in 2018.
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