Laguna Hills Developer to Buy Renowned Golf Resorts : Real estate: The $967-million deal is a result of new federal rules that forced a thrift holding company to sell its extensive holdings.
Barry G. Hon’s golf game may not qualify him for a shot on the pro tour, but the Laguna Hills developer could soon become a link’s master with his $967-million purchase of Landmark Land Co.’s vast real estate holdings, including some of the nation’s most renowned golf resorts.
The Orange County developer announced Monday an agreement to buy most of the land holdings of Landmark, a Carmel-based development and savings and loan holding company. The deal includes 19 golf courses, four resort hotels and thousands of acres of land in the Southland.
The deal, one of the largest real estate transactions in the country this year, includes such well-known resorts as PGA West, La Quinta Golf and Tennis Resort, Mission Hills Country Club, all near Palm Springs, and Palm Beach Polo and Country Club in West Palm Beach, Fla.
“Landmark is the best in the United States at developing golf courses,” said Hon, 51, owner of Hon Development Corp., which currently has major developments under way in Orange and Los Angeles counties.
Gerald G. Barton, Landmark’s chairman, president and chief executive, said Hon was one of about a dozen bidders for what he called the “best pieces of property in America.”
He said the sale will turn Landmark’s thrift unit, Oak Tree Savings Bank in New Orleans, into one of the strongest thrifts in the nation. The properties are funded, owned and operated by Oak Tree and its subsidiaries.
The sale of the resort properties and other real estate is being forced on Landmark by last year’s enactment of a federal law that requires thrifts to divest themselves of direct investments in real estate.
The transaction, which is to be completed in two phases over the next 14 months with financing from Oak Tree, is subject to regulatory approval and to Hon’s own review of the properties’ values and profit-generating prospects.
Hon expects to purchase $497 million of Landmark’s assets by the end of June, and has an option to purchase another $470 million a year from then. Hon has agreed to pay $100 million cash at each of the two closings.
The transaction means that Hon will gain control of a company with about 3,500 employees. He said it will be run separately from Hon Development, which has only 45 employees. The new company--yet unnamed but which will have the Landmark name in it--would include Oak Tree’s resort business, hotel management company and land development division.
Some investors expressed skepticism about the deal, which they said appeared to be a temporary arrangement to assuage regulators, who are auditing Oak Tree’s financial results, and the Securities and Exchange Commission, which is investigating Landmark’s accounting procedures.
Landmark previously had announced that it may postpone taking more than $24 million in profits on the sale of real estate near Palm Springs, a prospect that would boost its losses last year to $61.7 million and wipe out its shareholders equity.
Landmark’s stock closed Monday at $17.375 a share on the American Stock Exchange, down 12.5 cents a share from Friday’s close.
Barton said the new federal thrift law requires Oak Tree to sell its real estate ventures by the end of 1994. He said that despite the “fire sale sign” that requirement hung around his company’s neck, he was still able to sell the properties at a premium. The S&L; carries the real estate Hon is buying on its books at a little less than $600 million, Barton said.
“We’re not buying a basket of junk,” Hon said. “We’re buying a basket of trophies. We understand real estate development very well, and we believe the 1990s will be very strong for developers.”
Hon said he has run his real estate firm much like Barton has run Landmark. Both have aimed at the more affluent market, anchoring their residential projects with golf courses and hotels. Hon, in fact, uses Oak Tree’s golf course designers and developers for his Southern California projects.
Among Hon’s projects are the 2,750-acre Foothill Ranch, a master-planned community in South Orange County, and a proposed 850-acre development in Rancho Palos Verdes that would include a 450-room Ritz Carlton resort hotel and two golf courses.
The Foothill project, with 3,900 housing units, is typical of a trend toward combining offices and light industrial buildings with housing in big planned communities to provide jobs near people’s homes, thus curtailing traffic.
Hon Development is also developing Niguel Summit, a 1,500-home development in Laguna Niguel and Cypress Canyon. In all, the company has developed about 10,000 acres in Orange County in the last four years and owns more than 5,000 acres.
Real estate was Hon’s love since graduating from the University of Tulsa in 1960. He moved to California in 1962 and worked for nearly two years at Security Pacific National Bank in the branch development division. Looking for branch sites, he said, was a great way to learn the ropes of his chosen field.
Hon moved to Orange County in 1964 and soon opened up his own company.
His company has increasingly handled larger parcels. While Foothill is the biggest, the 6,700-acre master-planned Oak Valley community in the Landmark group will dwarf it. Oak Valley has plans for 13,000 homes, four golf courses--one of them is built already--and 922 acres of commercial use. It is located in an unincorporated portion of Riverside County at the intersection of Interstate 10 and U.S. Route 60, about five miles east of Redlands.
Landmark’s Barton, an Oklahoma native, said Hon shares a development philosophy with him and should be able to complete his plans in the various Landmark projects.
LANDMARK’S MAJOR PROJECTS
Orange County developer Barry G. Hon has agreed to purchase most of the resort and real estate holdings of Landmark Land Co. Some of the major projects included are:
* Kiawah Island, near Charleston, S.C. The barrier island resort includes a 150-room hotel, three golf courses and tennis facilities.
* Palm Beach Polo & Country Club in West Palm Beach, Fla. Includes real estate, an 18-hole and a 9-hole golf course, tennis, equestrian and polo facilities.
* Waterford Hotel, Oklahoma City.
* Stanford Oaks, 1,000 acres of undeveloped property in Rocklin near Sacramento.
* Carmel Valley Ranch, includes a golf course, tennis courts and 100-room hotel in Carmel.
* Mission Hills Country Club, three golf courses, residences and tennis facilities in Rancho Mirage near Palm Springs.
* La Quinta Golf & Tennis Resort, three golf courses and another under development near Palm Springs.
* PGA West in La Quinta. Includes four golf courses and a tennis facility. Four more golf courses are planned.
* Oak Valley, a 6,404-acre master-planned golf course community at the intersection of I-10 and U.S. Route 60 in Riverside County.
* Oak Summit, a 763-acre master-planned community near Rancho Cucamonga in San Bernardino County. Plans call for 800 homes in a gated community and a golf course.
* Greenspot, a 1,046-acre planned unit development near Yucaipa and Redlands in San Bernardino County. The project is planned for 2,045 homes, a golf course and equestrian area.
* Moreno Valley Ranch, a 1,846-acre development 10 miles east of Riverside. Plans call for 4,102 dwelling units, a golf course and a 300-room hotel.
Source: Landmark Land Co.
