The land underneath the Newport Beach Tennis Club has been bought by a prominent area retail developer.
An LLC headed by Diamond Development Group, the San Gabriel-based owner of Irvine’s Diamond Jamboree shopping center, last month bought the roughly 7.6-acre site of the tennis club on Eastbluff Drive near Corona del Mar High School.
ATH LLC paid about $12.4 million, property records show. That’s a little more than $1.6 million per acre.
The land was sold by a Newport Beach-based family trust that purchased the site in 1993 from Irvine Co., CoStar Group Inc. records show.
Newport Beach-based Irvine Co.’s Eastbluff Village Center is next-door to the tennis club.
There are no plans for a second retail project in the vicinity. The new owners bought the site as an investment, not a development play, according to Ed Hanley, president of Hanley Investment Group in Newport Beach, who brokered the deal.
There are no immediate plans to change the use of the property. “It’s expected that it’s going to stay a tennis club,” Hanley said.
The club has a lease for the land that runs into 2021, according to local tennis industry publications. The operators will begin working with the new landowners on a renewal in the near term, club members tell the Business Journal.
Development of the site into other uses had been a consideration for other potential buyers, primarily homebuilders, according to Hanley. The sellers didn’t want to go through the lengthy entitlement process needed to get the site zoned for housing, he said.
“There was a ton of interest, but the sellers didn’t want a long escrow,” he said of the off-market transaction.
Keeping the site as-is would run counter to what’s been seen in Orange County recently. A few other notable tennis properties in the area have been shuttered in recent years to make way for residential projects.
Among other deals in Newport Beach, Aliso Viejo-based New Home Co.’s Meridian luxury development of condominiums ranging from $1.5 million to $4 million next to Fashion Island, were built a few years ago on the site of a former tennis club.
New Home paid $5.6 million per acre in 2013, three and a half times the price ATH paid for the land under the tennis club—and made its investment back fast, selling out the 79 mostly ocean-view units within a year of opening in 2015.
Last year, the former Anaheim Hills Racquet Club was sold to homebuilder D.R. Horton, to make way for a single-family home project on the nearly 4.5-acre site.
Large Club, Other NB Club
Newport Beach Tennis Club is one of the two largest tennis clubs in the city, along with Palisades Tennis Club, which formerly operated as John Wayne Tennis Club.
Newport Beach Tennis Club opened in 1966—its website says it was envisioned to be the “Forest Hills of the West.” It has 19 tennis courts, plus a pool, restaurant, bar and fitness center.
It has hosted Davis Cup matches, and last year was home to the Orange County Breakers of the World Team Tennis league.
The Breakers now play at the 15-court Palisades Tennis Club, about a mile and a half south on Jamboree Road. Palisades has 1,150 members—550 memberships—and it’s split 45-year land leases with neighboring Sunstone-owned Hyatt Regency Newport Beach and investor Russ Fluter expire in 2019.
Ken Stuart, inducted this month into the Southern California Tennis Hall of Fame, opened the club with John Wayne in 1974. He has begun negotiations to extend his lease.
“It’s zoned open space recreational,” said Stuart, 100% owner of Palisades Tennis Club LLC. “And I’ve been told by a local development company, the county, coastal commission, and the state that it’s going to stay that way.”
Diamond Development Group is headed by Alethea Hsu, a doctor by trade who got into commercial real estate as a side business with other family members. She lives in Irvine.
In addition to Diamond Jamboree, the group owns a number of retail properties in the San Gabriel Valley.
Hanley said he’s worked with the buyer of the Newport Beach property on other area deals.
“The sale of the land beneath Newport Beach Tennis Club represents a once-in-a-lifetime opportunity,” he said.
The site is about five miles south of Diamond Development Group’s best-known local property, Diamond Jamboree.
The 120,000-square-foot shopping center, at the intersection of Alton Parkway and Jamboree Road, is about opened in 2008.
Its owners have proposed “24,618 square feet of additional restaurant and retail development” at a site next to the center, according to city records.
The proposed expansion has yet to make its way through the city for approvals.
