Lusk Co. Seeks to Sell Half of Marblehead : Development: The home builder reportedly wants $50 million for an equal share in the San Clemente project and says it has received 30 inquiries.
The Lusk Co., an Irvine home builder and developer, is asking $50 million for a half interest in its 250-acre Marblehead beachfront hotel and golf course project in north San Clemente, according to sources familiar with the project.
The company won’t confirm the asking price but does say it wants a partner with experience in operating an elegant hotel, since the quality of the resort will largely determine how much the partnership can charge buyers for nearby residential lots.
Lusk is also telling potential partners that they must share some of the estimated $90-million cost of grading and otherwise preparing the land--which sits atop 100-foot sandstone bluffs with a commanding view of the ocean--for development.
The company told city officials in May that it would build a resort and housing on the property, once considered a prime site for the Richard M. Nixon library, which ultimately went to Yorba Linda.
Local real estate experts say the site has attracted a fair number of potential buyers, and Lusk says it has had as many as 30 inquiries about the project. Pacific Rim investors, especially the Japanese, have been active in buying resorts.
“Some of the people who’ve inquired have indicated they represent foreign buyers,” said Donald D. Steffensen, a Lusk executive vice president.
Part or all of three prime sites are now up for sale on the southern coast of Orange County, which may hurt the sellers’ prospects, local real estate experts say. Just up the coast in the beach town of Dana Point, the Headlands property is up for sale and a little north of the Headlands a third resort-size parcel is on the market at Monarch Beach.
“I think we’re helped by the fact Marblehead is a very unique piece of property,” said Steffensen, the Lusk executive. “For one thing, it’ll have access to the freeway (once a planned interchange on Interstate 5 is built), and at 250 acres it’s a little larger than the other sites.”
However, only one of those sites--the Monarch Beach property--has all the necessary government permits to build a resort.
Lusk wants its partner in the Marblehead resort to help get approval for the resort plan from the San Clemente City Council and the state Coastal Commission, a process Lusk expects to take a year and a half.
The company is telling potential partners that it believes that by 1993 the city will approve a plan for the hotel, an 18-hole golf course, 225 houses and nearly 100 condominiums. Beach towns such as San Clemente and Dana Point depend on tourism and generally look favorably on such resorts as a large new source of tax revenue.
But an earlier Lusk plan--which included the Nixon library and much denser development on the 250 acres--ran into community opposition. That plan envisioned 1,200 homes and 70 acres of commercial buildings, including a hotel, two motels and a shopping center.
The former President, after years of negotiations with the city by his associates, finally demanded that the city approve the entire project or he would put the library elsewhere. The city complied but missed the deadline by a few weeks. Nixon then decided to locate the museum in Yorba Linda, his birthplace, rather than near the Western White House in San Clemente where he vacationed as President.
The new plan, Lusk told city officials in May, would leave 60% of the space open, although that figure included the golf course.
“This plan is consistent with what the city has indicated it’d like to see,” Steffensen said. “But I assume there’ll be some questions about the project.”
Lusk is telling potential partners it wants a co-developer with “direct experience” in developing resort hotels and golf courses. That partner may or may not bring in its own backers with deep enough pockets to buy half the resort for $50 million and spend tens of millions more to help build it.
The company has owned the property since 1978 and has been building homes on an adjacent 750 acres inland. Now it is turning its attention to the 250 acres directly on the coast.
Lusk’s plan calls for its new partner to own and operate the hotel, which Lusk doesn’t want to be involved in. Although there aren’t definite plans for the hotel yet, Lusk says most of the potential partners the firm is talking to are discussing a hotel of 250 to 400 rooms.
Instead of owning part of the hotel, the home builder will take for itself an unspecified number of acres equal to the value of the hotel and golf course. Lusk will sell those acres to home builders or wealthy people who will hire their own builders to construct custom houses.
The partners will then sell the remaining single-family lots and the condominium site. Lusk is not saying what it is expecting to charge for the lots. But land near the plush Ritz-Carlton hotel up the coast in Dana Point has been selling for more than $1 million an acre.
Lusk, one of Southern California’s largest and oldest home builders, also develops industrial parks as part of a conservative strategy of diversifying risk. Marblehead would be its first resort-hotel project.
