The dust hasn't yet cleared from a big real estate deal that went bust in this southern Orange County beach town, and a local developer is already trying to buy the seaside parcel involved in the deal.
Stein-Brief Group, a Dana Point development company, is talking to Chandler-Sherman Corp. about buying a 115-acre bluff-top property called the Headlands, real estate sources said Friday. Stein-Brief is contemplating building a resort hotel on the choice tract.
The talks come after an announcement Thursday that Qintex, the Australian resort and entertainment company, backed out of a $115-million commitment to buy the Headlands, where it planned to build part of a $1-billion resort and residential project.
"It's no secret we were interested in it before Qintex bought it," said a spokesman for Stein-Brief. "That's all we can say right now."
Chandler-Sherman executives could not be reached for comment.
The renewed interest by Stein-Brief could turn the development of the Dana Point resort into a real estate version of musical chairs.
In partnership with Hawaiian resort builder Christopher B. Hemmeter, Stein-Brief in July sold Qintex a second parcel in the Monarch Beach neighborhood of Dana Point for $132 million. Qintex planned to build the resort on both the Headlands and Monarch Beach parcels.
Qintex has suffered several financial setbacks in recent weeks. The company was unable to obtain financing to complete a $1.5-billion acquisition of MGM/United Artists film studios. Then a U.S. subsidiary declared bankruptcy. Recently Qintex announced it was drastically restructuring itself by selling assets, including three major resorts.
The company bowed out of the Headlands deal when it missed a $3-million payment to extend an option to buy the property. Chandler-Sherman was to obtain development approvals by the time the balance of the purchase price was paid by 1991. Qintex also forfeited $12 million already paid toward purchase of the land.
The company had to back out of the Headlands deal because its bankers refused to advance Qintex more money due to concerns about its heavy debt load and overall financial condition, a source familiar with the company said. Among other things, the lenders are deciding what parts of the company--and possibly whether all of it--should be sold to pay its debts, an Australian stock analyst said.
"They're selling basically anything they can get money for," said Edward Falkiner, head of research at Australian stockbroker Ord Minnett's New York office. "There's talk today they may pull the plug completely."
In a terse release Thursday, Qintex said it would "maintain ownership" of the Monarch Beach property. But real estate sources doubt Qintex will go forward with its development plans and would likely sell the property, possibly to Japanese interests.
There is even speculation in the real estate community that the previous owners of the Monarch Beach property--Stein-Brief and Hemmeter Development Corp.-- may be tempted to try buying the land back cheap.
Qintex offered the two companies $100 million more than they paid for the 232 acres two years ago, for a total of $132 million. Unlike the Headlands deal, Qintex bought the property outright instead of optioning it and paid almost the entire price in cash, sources said. So both Hemmeter and Stein-Brief are sitting on a lot of money that could be used to buy property.
Both Stein-Brief and Hemmeter officials said it's too early to speculate on whether either company would be interested in buying back the Monarch Beach property, where they previously planned a posh resort hotel. Hemmeter once called the property one of the finest in the United States.
"We've always thought it was a tremendous piece of property," said President Tom Robinson. "But it's premature to say we'd be interested in it again."
And Hemmeter has some problems of its own. The company is rethinking a plan to build a resort in the Caribbean in the wake of Hurricane Hugo and because of the reluctance of banks to lend in the area.
And its resort in Indian Wells near Palm Springs is tied up in red tape with local government and is behind schedule. Because nothing is happening with those two resorts, the company laid off 150 of the 350 employees in its Hawaii headquarters Monday.
Real estate observers said the Japanese, who are avid investors in resorts, are also likely buyers. Two Japanese companies already own half of Qintex's two resorts in Australia and one in Hawaii, sold to them in the spring during an earlier financial crisis.
The two companies--consumer credit company Nippon Shinpan Co. and the giant trading concern Mitsui and Co.--also got first crack at buying a half interest in Qintex's Dana Point resort as part of the earlier deal. Those companies also could be interested in Qintex's resorts in Australia and Hawaii.
"It wouldn't surprise me if Mitsui and Nippon Shinpan are talking about buying it all," said a company source.