Koll Co. to Manage Henley Properties’ Real Estate Empire

The Koll Co. said Monday that it has been retained to manage the $500-million real estate portfolio of Henley Properties Inc., including the controversial housing development along the Bolsa Chica wetlands abutting Huntington Beach.

As part of the deal, Donald M. Koll was named president and a director of Henley, and his Newport Beach-based firm was hired to oversee Henley’s 15 Southern California properties and holdings in five other states.

Henley operates in California through its subsidiary, Signal Landmark Co. in Irvine.

Neither Henley, a public company based in Hampton, N.H., nor the privately held Koll would disclose the value of the contract. But the management agreement is the largest ever for Koll, which has $4 billion worth of real estate under its control, officials said.

“Don Koll and his highly respected organization will help us to accelerate the development of our real estate projects and undertake various transactions to realize the value of our holdings for the benefit of our shareholders,” Michael D. Dingman, Henley’s chairman and chief executive, said in a prepared statement.

The contract allows Koll to participate in the profits that Henley makes from its projects and also to use Henley’s resources to purchase major blocks of property.

“My major thrust is going to be not only to manage properties but to redo some of the properties to try to get into large portfolios,” Koll said. “We may buy several large properties and either develop them or spin them off.”

The management contract runs for five years with automatic one-year renewals. Signal Landmark’s 45 employees and many of the other 150 Henley Properties employees will move into Koll headquarters in Newport Beach, he said.

“The whole thing is exciting to us,” Koll said. “We’ll have a public company, which we will be in charge of for making profits.”

While the Koll firm is privately held, Koll sits on the board of Wells Fargo and Grubb & Ellis.

Henley’s biggest single holding is the 12,000-acre Bolsa Chica wetlands and surrounding area which its Signal Landmark unit has been working on for years to develop. In an intricate plan drafted last year with the city, Orange County and the state, Signal Landmark reached a compromise that calls for preserving most of the Bolsa Chica area as natural wetlands but allows up to 5,700 homes on 412 acres on the bluff areas.

The city is attempting to annex the wetlands, and Henley is supporting the effort. Henley and city officials said Monday that the corporate change would not affect their agreement.

“Bolsa Chica is the key to the value of Henley Properties,” said Walter D. Sanborn III, managing director of investor relations for Henley Group Inc., the former parent of Henley Properties. “It’s the largest and most important parcel, and it’s best managed by someone in Southern California.”

Huntington Beach city officials who were reached Monday approved of the Koll-Henley deal.

“What we will have now is a shorter line of control,” said City Councilman John Erskine. “The Koll Co. is based in Newport Beach. It’s a local firm, and the control will be there, rather than out of state. I think that’s good.”

Michael Lennon of the Orange County chapter of the Building Industry Assn. of Southern California said the agreement “sounds like a good relationship” that should avoid any conflict. Henley is primarily a residential land developer, and Koll continues to build various office and commercial complexes.

Under the management contract, Koll has eliminated any conflict by agreeing to give Henley first shot at most business opportunities, such as the purchase of developable land, Sanborn said.

The deal with Henley is the latest in a series of major ventures Koll has undertaken. Koll, for instance, recently acquired $300 million in property from Wells Fargo Mortgage & Equity Trust. It also tried unsuccessfully to acquire 15,000 acres for $532 million from Union Pacific Corp.

Koll has built or is building office complexes in Newport Beach, Irvine, Orange, San Diego and other California and Arizona cities. The firm is drawing up plans for a $200-million Koll Anaheim Center and is building a $200-million, 28-story office tower in downtown Los Angeles.

The move to retain Koll is similar to other moves Henley Properties’ parent has made as it has spun off various businesses over the years.

The Henley Group itself was a 1986 spinoff from Allied-Signal Corp. The group consisted of 35 different businesses that didn’t fit in Allied, and it has been reorganizing and spinning off companies ever since in an effort to increase shareholder value.

The Henley Group moved from La Jolla two years ago and spun off Henley Properties last December. Dingman is chairman of both companies. Koll replaces Paul M. Montrone as president. Montrone remains president of Henley Group and vice chairman of Henley Properties.

In its first quarter, Henley Properties lost $2.2 million on revenue of $12.6 million. The main reason for the loss, Sanborn said, was that the company didn’t sell any significant amount of real estate to offset continuing expenses for the land it did own.

Times staff writer Bill Billiter contributed to this report.

HENLEY PROPERTIES’ HOLDINGS

In an agreement announced Monday, the Koll Co. will manage the holdings of Henley Properties. Henley’s Southern California holdings are owned through its Irvine-based Signal Landmark unit. Henley’s major properties include:

* Bolsa Chica, 12,000 acres including wetlands, slated for residential development in Huntington Beach.

* Fairbanks Highlands, 400 acres for residential development in north San Diego County.

* Sycamore Valley, 325 acres for residential development in Poway.

* Coronado Cays, 1,200 waterfront marina units on Silver Strand in Coronado.

* Eagle Crest, 580 homes aroung an 18-hole golf course and country club in Escondido.

* Industrial and business parks in Garden Grove, Ontario, Rancho Murrieta, Corona and Signal Hill.

* 300,000 acres of forest land in Michigan and Wisconsin, mainly used for recreation.

* 311-room Marriott Hotel at Long Beach Airport.

* Office buildings in Newport Beach, Long Beach, Signal Hill, La Jolla and Des Plaines, Ill.

* Wentworth by the Sea, a resort hotel with golf course, marina and restaurants in Rye, N.H. Owned as a joint venture.

* 10% limited partnership in 3,500 acres for residential development in Puako and Ouli areas on the island of Hawaii.

Source: Henley Properties Inc.