Value of Projects Irvine Co. Delayed Put at $100 Million

The Irvine Co. revealed Wednesday that its decision last week to curtail new projects because of the souring economy translates into the postponement of $100 million in capital expenditures.

The company, which is normally secretive about its finances, released the figure in a letter dated Nov. 14 that responded to a magazine inquiry about the company’s current troubles. The Irvine Co. is Orange County’s largest private landowner.

Still, the company said it has about $400 million in construction under way, including two office towers in Irvine, six industrial buildings, a shopping center and seven apartment complexes. Work on these projects is continuing.

“Our current building activity represents a capital expenditure in the neighborhood of $400 million, one of the strongest capital programs in the company’s history,” company spokesman Larry Thomas said in the letter.

“However, we are deferring an additional $100 million in capital expenditures into the future. I emphasize that this represents a deferment--not a cancellation of projects--until market demand justifies moving forward.”

The company would not disclose what projects are on hold.

The Irvine Co. depends largely on sales of its land to builders. But last week the company said it has run into cash-flow problems because the developers who buy its property are having trouble getting loans. It blamed the bank and thrift crisis, which has prompted many institutions to tighten purse strings.

And even if financing was available, the company does not consider it a good time to build. Home sales have slumped in the county, and there is a glut of office space in many county areas.

So land sales on the Irvine Co.’s sprawling 64,000-acre landholding--and indeed elsewhere in the county and in Southern California--are slow, even though the price of land is said to be dropping. Land prices had been soaring for several years.

The company said last week that with its cash flow curtailed, it was laying off 40 people, or about 11% of its work force. The company also sharply reduced its staff several years ago, when the company stripped down its operations, with much of its work contracted out to other companies.

Still, the company is not struggling under huge overhead costs, and even though the value of the company’s land has probably diminished recently, the firm is big enough to borrow money for construction more easily than smaller developers.

The company said that as a major landholder and real estate investor, it is prepared to take its time--up to 50 years--to develop its property.

“We consider our efforts to reduce overhead a cautious and prudent action in the current real estate market,” Thomas wrote. “We will selectively pursue new investment project on our land.”

He also said the company is “reasonably optimistic” that it can proceed with three retail centers, each in the range of 100,000 square feet, and at least four apartment complexes totaling 1,023 units.