Project Shows Real Estate’s Fall : Oxnard: Wells Fargo takes over half of the Channel Islands Business Center and offers it for sale. Its developer is cutting back.
For two decades no one enjoyed the real estate boom in Ventura County more than John B. (Jack) Gilbert, head of TOLD Corp. In 1985, when TOLD opened the 56-building Channel Islands Business Center in Oxnard, it was to be the crown jewel of Gilbert’s commercial real estate empire.
TOLD had become the biggest developer of industrial buildings in Ventura County, and as the area grew, so did Gilbert’s fortune.
But now the Channel Islands site on Pacific Coast Highway has become a symbol of the collapse of the real estate market in Ventura County. TOLD, based in Oxnard, has run into tough times, and Gilbert, 71, is getting used to making do with less.
Wells Fargo has taken over half of Gilbert’s Channel Islands development and has put that part of the property up for sale at $29.5 million.
Gilbert knew he was in trouble when his tenants starting missing their rent payments, and he couldn’t pay his bank loans. “The small and medium-sized companies we were targeting seemed to be hit hardest of all. They had less resources than the big companies for keeping afloat,” Gilbert said.
So earlier this year, Wells Fargo, the lead lender on the 225-acre project, canceled TOLD’s debt in exchange for half the Channel Islands development.
Overall, Gilbert has shut down two of TOLD’s three operating divisions and laid off 163 people, leaving the parent company with a payroll of 25, down from a peak of 188 in 1989. Until its fortunes turned downward two years ago, Gilbert said, TOLD’s holdings were worth at least $120 million.
He said that TOLD Corp. lost about $25 million in the fiscal year that ended in February, 1991. The following year, the firm had a profit of $2 million, but it will probably show a loss for the current fiscal year.
This is not to say that Gilbert is headed for the poorhouse. He is still wealthy. Even after its problems at Channel Islands, TOLD still owns a shopping center in San Luis Obispo, 15 buildings in Newbury Park, land in Camarillo and major stakes in office buildings and other income-producing properties in Seattle, Dallas, Minneapolis and Milwaukee.
Three years ago, TOLD was active as a builder or property owner at 19 locations, about half of them in California (mostly in Ventura County) and about half outside the state. Today, the “projects,” as Gilbert calls them, are down to nine.
Gilbert is disappointed that he won’t be able to complete his largest undertaking, the Channel Islands center. The center boasts wide streets, handsome landscaping, fiber-optic technology, even light-sensitive artworks on the project’s borders that change color with the temperature.
But, even though 100 companies have moved into the development, some of its parking lots are empty--a sure sign that the adjoining buildings are vacant.
Gilbert made his first fortune heading Zero Corp., a Los Angeles producer of electronic housings, luggage and camera gear that does about $160 million a year in sales. He’s still chairman of Zero, though no longer involved in its day-to-day operations.
In 1973, convinced that Ventura County was on the verge of becoming a Southern California business and residential center, Gilbert relinquished day-to-day management of Zero and launched Thousand Oaks Land & Development Co.--a name that was eventually changed to the acronym TOLD.
His first buildings, in Newbury Park, sold and rented well. Both sales and leases were important, because Gilbert financed new developments through sales and held onto half the buildings so he could lease them out to bolster his cash flow.
TOLD Corp., in fact, outgrew Ventura County, establishing outposts in Dallas, Seattle, Minneapolis and Milwaukee--moves that eventually helped keep TOLD afloat as problems developed in Southern California.
For years Gilbert thrived as companies moved from the bustle of Los Angeles to quieter Ventura County. Throughout the 1970s and 1980s, TOLD built about 250 buildings totaling more than 5 million square feet.
“A lot of people made the move,” Gilbert said, as he sat before a second-floor window in one of the buildings that is for sale by Wells Fargo. “But then the recession came along.” About two years ago, Gilbert sensed that the recession was beginning to hurt many of the small and medium-sized businesses that had been attracted to Channel Islands.
“A handful of the companies that were leasing their space were starting to be late with their rent. Then the number started increasing. These people invariably had the same excuse. Orders were down. Payments that they were waiting for were coming in late, too.”
As the recession deepened, some key developments in the Channel Islands park failed to materialize--such as a Ramada Inn that didn’t get built because the group that held the hotel franchise couldn’t get financing. Then a planned processing center for newly imported Mercedes-Benzes didn’t get beyond the drawing board.
And there was a steep decline in sales of the center’s buildings and land.
Gilbert wouldn’t say how much he owed Wells Fargo, but he admitted that after two years of cash-flow problems, he was concerned. “I won’t say we were in danger of being repossessed or filing for bankruptcy. I will say I was worried.”
Wells Fargo finally agreed to cancel TOLD’s indebtedness in exchange for 25 buildings, totaling 432,000 square feet, and 87 undeveloped acres. “We received no money, but our debt, at least, was off the books,” Gilbert said.
Wells Fargo won’t comment on TOLD’s loan. “We never discuss our relations with specific customers,” said spokeswoman Kathleen Shilkret.
She confirmed, however, that the Channel Islands property has been turned over to a wholly owned subsidiary of the bank, ATC Realty Sixteen, which she said is actively marketing the buildings and land.
While the asking price for this bulk offering is $29.5 million, the property can be purchased in four pieces at asking prices totaling $31.8 million. Whether it’s bought in a single package or broken up into smaller increments, it’s one of the biggest real estate offerings in Ventura County history.
Ironically, Wells Fargo is selling the property through TOLD Partners, a commercial and industrial real estate brokerage that was formed by former-TOLD Corp. President Pat Hall and some of Gilbert’s former top marketing aides.
Already, they say, they have received multiple offers for the properties. An announcement is forthcoming soon, they add.
Gilbert’s competitors speak well of him. “He’s a shrewd, honest developer,” said Russ Goodman, Los Angeles/Ventura Regional president of the Sammis Co. “Unfortunately, his center was hit by the same economic conditions that have been felt by many others.”
Said Martin V. Smith, head of Martin V. Smith & Associates, developer of Oxnard’s Financial Plaza and numerous Ventura County projects: “Wells Fargo must have thought an awful lot of Jack to make the kind of deal they did with him. He’s a sharp businessman, and you can trust him at his word.”
“I’ll probably stick around two or three years, long enough to straighten things out at TOLD,” Gilbert said. After that, he plans to turn the company over to someone else.
One of the candidates is Gilbert’s son, Rod, 31, who heads the TOLD management unit. Rod says he sees signs of a persisting turndown as he visits the company’s remaining industrial tenants. “I know they’re not lying when they tell me things are slow,” he said. “I try to work with them. I know that’s the best approach in the long run.”
Jack Gilbert doubts that he’ll ever get back into big-time development, but he’s already launched another career, this time as a restaurateur. He owns five restaurants, including a Marie Callender’s in the Channel Islands center. “Right now, they’re not making any money, but I figure they’ll do well once the economy starts to bounce back.”
