Costa Mesa Developer Ahead of the Game in $11-Million Deal : Real estate: Partnership buys 153 acres in San Clemente that sold for $38 million in 1988. The lot features more than $30 million worth of previously installed improvements.
In a deal that paid for itself before the ink dried on the contract, a Costa Mesa commercial developer has acquired 153 acres in San Clemente’s back country for $11 million--less than a third of what the property sold for in 1988.
Rancho San Clemente Partners said it plans a $100-million retail and residential development, including as many as 300 homes. The company is also planning a shopping center with several large stores as well as shops, restaurants and entertainment facilities, including a 12-screen cinema complex.
Work on the center, to be called Plaza Pacifica, is expected to begin by next year.
Better even than the discount terms negotiated with the federal Resolution Trust Corp., which has owned the property since acquiring it from a defunct savings and loan in 1989, the partnership gets more than $30 million worth of previously installed improvements, including an underground culvert that drains the entire property and cost $25 million to build nine years ago.
Rancho San Clemente Partners is an investment group headed by Ramser Management Co., an 8-year-old Costa Mesa company that has built and owns about 2 million square feet of industrial and commercial buildings in Los Angeles. Ramser is general partner and master developer for the project.
Ramser also expects to sell 25 acres of the property to residential builders and could gross $15 million for the property at today’s prices--though the net cost would be considerably less because of the expense of preparing the property for sale.
“The roads alone will cost $2.8 million,” and grading the lots could run $4.3 million more, said Paul Loubet, director of marketing for Ramser. “There are lots of costs and lots of risks” associated with residential development.
Loubet said Ramser plans to develop the property for a 69-acre “power center”--an outdoor shopping area anchored by large stores such as Wal-Mart and Home Depot.
Loubet said Ramser initially intended to develop the housing section of the property after the commercial center but has seen such a swell of demand for residential lots in Orange County that it now is considering concurrent development.
“We would prefer it because of the economies of scale,” he said, referring to the grading, soil stabilization and road construction work that has to be done on the hilly site.
He said he expects mass grading of the property to be completed by the third quarter of 1995, with lot sales to retailers and commercial and residential builders beginning then and continuing into 1996. Completion of the entire project, Loubet said, could come as early as 1999. The development partnership purchased the property from the RTC in June.
The previous owner, Shanco Inc. of Newport Beach, paid $38 million for the same 153 acres in 1988, financing $28 million of the purchase with a note from Western Savings & Loan Assn. The federal government ended up with the property after it seized Western in 1989.
Ramser does not anticipate difficulty getting approval from the city of San Clemente because its plans for the property all involve less intensive development than the property is zoned for, Loubet said.
The 300 homes the partnership proposes for the 25-acre residential portion, for example, represent a 42% reduction from the 517 units allowed. Ramser is also proposing to set aside 59 acres of the property for open space.
Ramser was founded in 1986 by former Grubb & Ellis Commercial Real Estate broker Philip Scott Ramser Jr. The company raises funds though equity investments by private parties and says its real estate portfolio is now valued at $75 million.
The San Clemente deal, one of the largest land sales in Orange County since the recession began in 1990, is Ramser’s first in the county. Though it is based in Costa Mesa, the company has worked only in Los Angeles County, Loubet said, “because until now we thought real estate prices were just too high in Orange County.”
