A land sale that brought in close to $200 million has FivePoint Communities Management Inc.’s Emile Haddad thinking about the second phase of development at the Great Park Neighborhoods in Irvine.
FivePoint, the Aliso Viejo-based development manager of the 3,700-acre housing and commercial development, last week finalized the sale of its first batch of home lots on the former El Toro Marine base land.
Eight builders closed on the 726 lots, located in the northwest corner of the former base, along Portola Parkway.
The builders, a mix of public and privately held companies, are expected to begin construction for the first model homes on the land later this month.
September Sales
The 726-home project, which is being called Pavilion Park, should open for sales by late September, with early homebuyers moving into the neighborhood by the end of the year.
Pavilion Park will feature a mix of homes and detached condominiums running from about 1,700 square feet to more than 3,700 square feet. Pricing is expected to start around $600,000 for smaller homes at the neighborhood.
Builders selected for the project include Newport Beach-based William Lyon Homes; Lennar Corp., whose homebuilding operations are largely run out of Aliso Viejo; and Walnut-based Shea Homes, whose sister company, Shea Properties Inc., also is based in Aliso Viejo.
Also tapped for the project were K. Hovnanian Homes, PulteGroup Inc., Richmond American Homes, Ryland Homes and Taylor Morrison Home Corp., which recently completed a nearly $629 million initial public offering.
“There’s been a lot of speculation (about the fate of the development)—today, that question gets answered,” FivePoint Chief Executive Haddad said last week. “I can’t describe the excitement in the office.”
Land Prices
Part of that excitement likely comes from the prices builders are paying for FivePoint’s land.
Terms of the land sales weren’t disclosed. Residential real estate sources estimated the average price paid by the builders was between $200,000 and $300,000 per lot, depending on the product type; a midpoint of that estimate would put the total sale price at around $180 million, with the high-end well over $200 million.
Haddad declined to comment about specifics of the land deals but said prices paid were comparable to pricing seen on some developments headed up by Newport Beach-based Irvine Company (see related story, page 1), which controls much of the land around the Great Park.
Land sales on the Irvine Ranch had been reported to be as high as $370,000 per lot for some sites over the past six months, according to real estate sources.
Timing
It’s not believed that FivePoint’s deals approached that level of pricing, but the ongoing upswing in the new home market means the developer’s land sale came at as good a time as any over the past five years.
“The timing seems to have been exactly right,” said Haddad, who noted that 21 national and regional firms were involved in the bidding process for portions of the 726 home lots.
FivePoint plans to strike again while the market is hot.
Development work is now under way for the second batch of homes at the Great Park Neighborhoods, on a swath of land south of Irvine Boulevard that’s closer to the heart of the 1,300-acre Orange County Great Park—the public amenity that’s been billed as the eventual centerpiece of the development.
The second neighborhood could hold between 500 to 1,000 homes, according to Haddad.
FivePoint is currently entitled to build about 5,000 homes and 1.2 million square feet of shops, offices and other commercial development on its 3,700 acres of land, which was purchased in 2005 for about $1 billion.
City Talks
Talks with the city of Irvine to boost the entitlement to 10,700 homes while reducing some commercial development remain ongoing, according to Haddad.
Also ongoing: talks with the city to figure out a way to ramp up construction at the city-run Orange County Great Park.
FivePoint last year announced a proposal whereby it would pay $211 million to help kick-start construction at the park.
Last November’s city election, which brought in a new city council majority, appeared to put those plans on ice.
Haddad said he hopes the reality of new homes coming to the area will prompt the city to move forward with plans for the park.
