5% Stake in Irvine Co. Is Up for Sale : Investment: Minority owner’s offer--discounted at $500,000 a share--is likely to lure pension funds and the wealthy.

A minority owner in Irvine Co. has put his shares in the well-known Orange County real estate firm up for sale for $94 million as part of a private offering that is attracting interest among wealthy investors and major pension and trust funds.

Howard P. Marguleas, an Irvine Co. director since 1977, wants to sell his 5.05% stake in the privately held company to meet his other “business obligations,” according to a confidential stock prospectus distributed to select investors and funds.

Irvine Co., which turned a family ranching empire into a sprawling real estate giant, is run with an iron hand by billionaire owner Donald L. Bren, who still holds 92% of the company’s outstanding shares. This means he elects all board members and controls all aspects of the company’s operations and future plans.

The company is known for keeping its finances secret. But the prospectus reveals that its assets are currently worth about $4.1 billion and that it has an estimated $1.8 billion in debt. Irvine Co. officials did not review, prepare, provide information or confirm the accuracy of the prospectus and its numbers.

At $500,000 a share for Marguleas’ stake, ownership of the stock could become the ultimate status symbol for affluent Southern California investors.

“This is as blue chip as you’re going to get in the Southern California real estate market,” said Winston Elton, principal in charge of the real estate group with KPMG Peat Marwick, an accounting firm.

“This is not the sort of stock that’s going to double or triple (in value) in a year,” he said. “This is an investment for the long haul--a piece of the rock.”

And it comes at a discount, according to the prospectus. Marguleas, the former chairman of Sun World International, is offering to sell the stock at 19% below its estimated value of $617,984 a share.

But investors would have no voting rights, could not sit in on board meetings and, in the short term, would not receive much of a return on their initial investment because the company pays only a 0.6% dividend. Even so, that dividend comes to $3,000 a share annually.

Many wealthy Southern California families and high-profile individuals are reportedly interested in the shares as a secure, long-term investment that could pay off big-time as development continues, or if Irvine Co. eventually goes public.

Major county or state pension funds, such as the California Public Employee’s Retirement System, would also be likely investors, especially if they join together to buy shares, several sources said. Irvine Co. has a total of 3,722 shares of common stock outstanding.

The company has been the owner and developer of Irvine Ranch, a vast swath of land that stretches from the ocean to the Santa Ana Mountains. The company’s holdings include two hotels, two golf courses, several shopping centers and about 11 million square feet of office and industrial space.

Bren acquired a 35% interest in Irvine Ranch as part of a group that purchased it for $337 million from the Irvine family after a wild bidding war in 1977.

Bren acquired his controlling interest in 1983. Marguleas, as a minority shareholder, joined with Bren and other investors in 1977 to purchase the company, and he remained a minority shareholder when Bren purchased his controlling interest.

The company’s net worth is now estimated at $2.3 billion, up sharply from a decade ago. In the late 1980s, after years of litigation by heiress Joan Irvine Smith, a judge ruled that as of 1983, the company’s stock value was $1.3 billion.

Bren did not step forward to buy Marguleas’ stake or put together an investor group to buy the shares. He has been in a selling, not buying, mode, real estate experts said, citing his sale of the company’s apartment division to the public for nearly $200 million last year.

Marguleas is selling his securities through Friend/Danzi Capital Partners, an investment banking firm in Irvine. Michael Danzi, the firm’s executive director, refused to comment.