Toll Brothers Inc. has completed one of Orange County’s largest residential land transactions of the past year, for a large chunk of the Pacifica San Juan housing development in San Juan Capistrano.
The Horsham, Pa.-based luxury homebuilder, one of the most aggressive land buyers in OC the last few years, recently completed the buy of 169 home lots at Pacifica San Juan, a master-planned community just off the San Diego (I-5) Freeway.
The 259-acre development is on a bluff overlooking much of San Juan Capistrano and Dana Point.
Toll Brothers bought the land from Pacific Point Development Partners LLC, a venture headed by Scottsdale, Ariz.-based Taylor Morrison Home Corp. in a deal brokered by the Irvine office of land advisory Land Advisors Organization.
Financial terms of the transaction weren’t disclosed by the participants in the deal; property records show Toll Brothers paid about $104.7 million, or roughly $619,000 per home lot.
The deal appears to have been profitable for Taylor Morrison, which in mid-2015 partnered with Oaktree Capital Management LP in Los Angeles and DMB Pacific Ventures LLC in San Francisco to buy 318 home lots at Pacifica San Juan, whose development stalled following the recession and the 2008 bankruptcy of Lehman Brothers Inc., the site’s prior owner.
The 2015 deal, totaling about 194 acres of Pacifica San Juan, was estimated at the time to be in the $150 million range.
Taylor Morrison has since opened several neighborhoods at the development; its latest, a 70-unit project called The Cove, just opened its models and has homes starting around $700,000.
Nearly 70 homes have been sold by Taylor Morrison at Pacifica San Juan since the project reopened in 2016, according to housing sales data.
Big Lots, Ocean Views
Toll Brothers’ just-completed acquisition includes a little more than half of the home lots that Taylor Morrison bought in its 2015 transaction. It also includes a good portion of the larger homes and lot sizes remaining at the site.
The builder plans to construct three neighborhoods in the gated community: The Peninsula, a 23-home project featuring estate lots with an average lot size of 18,316 square feet; Crystal Downs South, which will have 82 homes on lots averaging more than 11,000 square feet; and The Pearl, which will hold 59 single-family detached homes with lot sizes of about of 4,200 square feet.
Many of the homes include ocean views, in addition to views of Dana Point Harbor, according to officials with Land Advisors who also worked on the 2015 sale of the site to Taylor Morrison.
“The opportunity to purchase ready to build improved coastal lots in coastal Orange County is a rare event, virtually nonexistent today,” said Terry Ruckle, founding principal at Land Advisors who worked on the deal with colleagues Mike Hunter, Allison Rawlins Tift and Mac O’Donnell.
Pricing for the new communities, some of whose models could open this year, hasn’t yet been announced by Toll Brothers.
‘Raising Prices’
The deal adds to a busy new-home pipeline in OC for Toll Brothers (NYSE: TOL), which has a market value of about $8 billion. It’s the largest builder of luxury homes in the country.
Toll has several upscale projects under way at Irvine Co.’s Orchard Hills community, with some projects there topping $3 million.
Elsewhere in Irvine, it’s working with Miami-based Lennar Corp. to develop Altair, an 840-home gated community that’s next to Great Park Neighborhoods. The first batch of lots that Toll Brothers bought at that project were valued at about $900,000 each, according to regulatory filings.
It’s also co-developing Lake Forest’s Baker Ranch community in a venture with Shea Homes in Walnut.
Baker Ranch sold 479 homes last year and was the 18th best-selling master-planned community in the U.S. last year, according to data from Irvine-based John Burns Real Estate Consulting.
For projects in California in general, and OC specifically, “What we have right now selling is selling very well, (and) we continue to raise prices,” Toll Chief Executive Doug Yearley said in a December conference call with analysts.
At the company’s nearly built out Hidden Canyon community in Irvine, where home prices approach $2 million, the builder saw gross margins of nearly 50%, well above the 28.5% average in California as a whole last quarter, Yearley said.
Those gross margins appear to be prompting the company to make its latest land buys, which are likely to hold some of its largest homes.
In November, Toll paid a reported $44 million, or nearly $940,000 per lot, for the 47-home Stonecliff Estates development site in Yorba Linda, where homes will be built on sites averaging about a half-acre, or a little more than 20,000 square feet.
Along with the soon-to-be-built Peninsula project at Pacifica San Juan, the Yorba Linda community will have some of the largest lot sizes of any housing development in the region.
Most of Toll Brothers’ other luxe homes in Irvine and other parts of OC have lots in the 6,000- to 12,000-square-foot range. For example, its Alta Vista development in Irvine’s Orchard Hills community, with some homes priced at nearly $3 million, has lots of about 11,000 square feet, according to brokerage data.
