Dana Point Resort Plan Appears Dead
A bid by the Australian concern Qintex to develop a major seaside resort in Dana Point appears to have failed after the financially troubled company said Thursday that it would not complete purchase of a key 115-acre tract.
Qintex said in July that it would build a $1-billion resort on the property, known as the Headlands, and another nearby tract in the small southern Orange County beach town. The two properties are among the last large undeveloped sites on Southern California’s coast.
The decision not to buy the highly prized property comes in the wake of several other setbacks for Qintex, including its recent failure to complete the acquisition of the MGM/UA film studios. That $1.5-billion deal fell through when Qintex could not complete the financing.
Those problems also appear to be behind the company’s decision not to acquire the Headlands parcel. A company source said Qintex’s Australian lenders refused to advance more money for the Dana Point resort project pending a review of the company’s financial status.
Qintex’s action disappointed Dana Point officials, who learned about the collapse of the land deal from company officials late Thursday. The city, which was formed Jan. 1, was anticipating that the project would soon generate millions of dollars in tax revenues.
“We’re watching this with a great deal of interest,” said Mayor Eileen Krause, who was attending the dedication of Dana Point’s new city hall. “It would be nice to know what’s going to happen. But obviously we will have to deal with a change of players.”
Qintex agreed earlier this year to buy the Headlands property for $115 million. But Qintex took an option on the land that did not require most of the purchase price be paid until 1991, by which time the owner was to have obtained permission from Dana Point to build on the land.
By missing a $3-million installment payment on the Headlands property, Qintex loses its claim on one of the choicest pieces of real estate in Southern California. It also loses an additional $12 million it had already paid Chandler-Sherman Corp., the owner of the property. Company spokesmen could not be reached for comment.
Qintex said in a terse release that it would “continue to maintain” ownership of the other Dana Point property, at Monarch Beach, on which the purchase was completed last summer. The company also said it would continue to operate a tennis and golf club there.
Company officials in Los Angeles and in Brisbane, Australia, did not return phone calls seeking additional comment.
But Qintex said earlier that the resort would be hard-pressed to succeed if it didn’t encompass both properties, which are less than a mile apart, and local developers familiar with the project agree. The company had planned to build a posh hotel and expensive houses and condominiums, all overlooking the Pacific Ocean, on the properties.
A source familiar with the company said it was “far less likely” now that Qintex would develop the resort at all. A more likely scenario, he said, was that the company would sell the Monarch Beach land to raise cash.
Qintex paid $132 million for the 232-acre Monarch Beach parcel, acquired from Hawaii hotel developer Hemmeter Corp. and local developer Stein-Brief Group.
The two owners had paid only $32 million for the land less than two years earlier, fueling speculation that the Australian concern had overpaid and didn’t understand how costly and time-consuming development in Southern California can be.
Stein-Brief and Hemmeter had already spent months getting permission for an elaborate 1,100-room resort modeled after Hearst Castle.
Qintex announced that it would probably change the Hemmeter plans and build a smaller resort more akin to the exclusive Ritz-Carlton nearby. That in turn worried local officials, who were concerned that the smaller hotel might bring in less tax revenue.
They also worried about Qintex’s other plans. In order to bring in some money while the hotel was getting on its feet, Qintex was likely to ask permission to build and sell houses nearby. The land, however, came with permission to build only a hotel, and local officials opposed building houses because they said it might aggravate traffic.
Mayor Krause said the Qintex proposal seemed the best use of the land. She also said the City Council will look strictly at future proposals to make sure that they are resort-oriented and that they minimize traffic concerns.
Dana Point City Manager William O. Talley said it is too early to gauge the effect of Qintex’s action on the city. “It would be foolish to speculate on the impact of this,” he said. “The city is not in any position to control the events.”
If Qintex also sells the Monarch Beach property, it is likely to be bought by Japanese interests, sources said. When Qintex was again overburdened with debt earlier this year, it sold half its interest in three resorts--two in Australia and one in Hawaii--for $350 million to two Japanese companies, Mitsui & Co. and Nippon Shinpan Co.
Last week, when Qintex announced that it was selling the rest of its interest in those resorts as part of a major restructuring, stock analysts said it was likely that Mitsui, Nippon and perhaps other Japanese companies would be among the bidders. The Japanese are avid investors in resorts.
Whether the Dana Point property is sold depends largely on how soon Qintex can sell its other three resorts and what it can get for them, according to one source.
Mitsui and Nippon are already familiar with the Dana Point properties, since as part of their March deal to buy Qintex’s resorts they got first crack at becoming partners with Qintex in the Dana Point resort. They have been talking to Qintex about investing in Dana Point for months, a source said.
The development announced Thursday was the latest in a series of mishaps that have tarnished Qintex’s once golden image. A U.S. subsidiary, Qintex Entertainment Inc., recently filed for bankruptcy when it failed to meet a $5.9-million payment to MCA Inc.
Times staff writer James M. Gomez contributed to this story.
