O.C. Gem Reappraised--$187 Million : Marketing: The 114-acre Headlands in Dana Point is worth, in the owners’ eyes, far more than the $120 million they accepted just a year ago.
One of the last large undeveloped beachfront properties, a 114-acre wind-swept bluff in southern Orange County called the Headlands, is for sale and its owners say the land is worth $187 million--or more.
In a confidential marketing package sent to prospective buyers and obtained by The Times, the owners--the wealthy Sherman and Chandler families--estimate the value of the property at between $187 million and $212 million.
That estimate, based on recent land sales in the area, is far above the $120 million that they agreed to sell the land for just a year ago and indicates the premium prices that undeveloped coastal property can command.
Although the marketing circular cites a range for the property’s value, it does not actually name a price. “Because of the property’s unique nature, its potential value . . . is difficult to quantify; hence, no asking price has been set,” the document states. It is being distributed for the owners by their agent, an arm of the New York financial services firm Morgan Stanley Group Inc.
The packet also provides suggested development plans for construction of two expensive hotels with a total of as many as 600 rooms on the bluffs, as well as more than 220 attached housing units, a restaurant and a small shopping center.
On a beach called the Strand at the foot of the bluffs, the owners recommend developing 45 custom lots for sale in what would become “the most exclusive community in Southern California.”
The Headlands was acquired decades ago and is owned outright with no debt by the two families, the marketing material says.
A representative of the Sherman family--descendants of M. H. Sherman, an early Los Angeles developer--declined comment. Representatives of the Chandler family--whose interests include real estate holdings and a stake in Times Mirror Co., owner of the Los Angeles Times--also had no comment.
The land was optioned last year at a price of $120 million to the Australian company Qintex, which made a splashy debut in the local resort market. But the high-flying company got overextended last fall and the deal fell through, as did Qintex’s bid to buy the MGM/UA movie studio for $1.5 billion. Qintex is now in receivership in Australia.
A handful of resort hotels have done well along Orange County’s beaches, and developers are planning more in Huntington Beach, Newport Beach, Dana Point and San Clemente, cities now trying to market themselves together as the “American Riviera.”
Qintex, in fact, bought outright another parcel just up Coast Highway from the Headlands, where the Australian hotelier still has permits to build a huge hotel designed to look like the Hearst Castle in San Simeon. That land is also up for sale, according to the Australian receiver overseeing the sale of the company’s assets, and has elicited a lot of interest from Japanese investors.
The Headlands, on the other hand, carries no government permissions to build. The new owner would have to win those from the city of Dana Point and--for part of the property--would need permission from the state Coastal Commission as well.
Dana Point had been an unincorporated part of Orange County until last year, when it incorporated largely as a reaction to what citizens perceived as county government’s lax attitude toward untrammelled growth. Dana Point officials have said their approval of plans for the Highlands depends to a great degree on how accessible the site is to the public and how much open space is left.
The marketing circular thinks approval for development will not be difficult: “The city of Dana Point appears favorably disposed to high-quality development such as that proposed for the property. The city considers the site and development concept to be important to its economic future.”
The marketing package recommends developing all but 44 acres of the property.
Of the 92 acres atop the bluffs, the plan envisions a $100-million resort hotel of 375 rooms on 14 acres on a spur of land towering 100 feet over the ocean. This would be comparable to the ultra-expensive Ritz-Carlton hotel just up the coast.
The plan envisions a second hotel that would be comparable to the less elegant Dana Point Resort nearby. This hotel, which would cost $34 million to build on 7 acres, would have 225 rooms.
The plan also envisions building a restaurant on a 3-acre parcel overlooking the beach, constructing 61 townhouses and 156 high-density condominiums on 21 acres and 12 high-density units on another acre. A small specialty shop center on 3 acres near Coast Highway is also part of the package.
The 22-acre Strand property--the beach at the foot of the soaring Headlands--would be divided into 45 lots of about 8,000 square feet each under the Morgan Stanley plan and sold to wealthy people who would build their own homes there. The new community would be guarded by a gate.
Smaller ocean-view lots sell for as much as $2.4 million in nearby Ritz Cove, the plan says. Such lots sold for $800,000 only two years ago.
Although the plan is merely a suggested one, it drew immediate fire from an official in Dana Point, which is now redrawing its general plan for the area. The suggested plan doesn’t seem to leave enough open space, said City Manager William O. Talley, nor does it provide specifically for a city hall the city would like to build on the spot.
The entire property, the marketing package says, is “one of the most spectacular land sites in North America,” with a view south to San Diego and north to Long Beach. It is, the package says, “one of California’s most prominent land formations.”
In fact, the beach town is named for Richard Henry Dana, who described the Headlands in his memoir, “Two Years Before the Mast.”
