Irvine Co. Play Makes It New Ballgame
For months, the Irvine Co. played a low-key role in the heated political debate over neighboring El Toro Marine Corps Air Station. This week, the giant developer suddenly stepped to center stage.
“Now that the Irvine Co. is involved, it’s a whole new ballgame,” said Louis H. Masotti, director of the graduate program in real estate management at UC Irvine.
On Thursday, Irvine officials confirmed they are discussing with the U.S. Interior Department the possibility of a land swap in which the giant developer would gain control of all or parts of the base in exchange for property bordering the Cleveland National Forest.
While local politicians and environmentalists assessed the prospects for the swap Friday and how it would affect the county, local businesses executives also considered what the swap--and a possible commercial airport at El Toro--would mean for the Irvine Co. itself.
Real estate analysts say that the proposed land swap may end up allowing the Irvine Co. to exchange environmentally sensitive, hard-to-develop hilly acreage for level, easily accessible land adjacent to its flagship investment, the 3,600-acre Irvine Spectrum business park.
“It was very intelligent for them to wait and see where the flak was going to fall, if it was going to be pro-development or anti-development,” said Kenneth Agid,) an Irvine real estate marketing consultant.
“If a developer takes a premature stance, you might not be part of the final decision-making process. I think it fits in with the politically correct approach of doing business in Orange County today.”
The air base is slated to be closed by the end of the decade, and a roiling debate between government and business interests over potential uses for the site has thus far excluded the Irvine Co., which owns more than 4,000 undeveloped acres near the air station.
If Orange County’s largest landowner succeeds with the land swap, it would be another in its long string of savvy moves, local real estate experts said, and a personal triumph for Irvine Co. Chairman Donald L. Bren, who bought the company in 1983.
The company is not only large and prosperous, it is well connected. Because of its generous political contributions since the 1980s, the company wields considerable clout in Washington and Sacramento. Its reclusive billionaire chief executive, Bren, is a longtime friend of Gov. Pete Wilson.
Other real estate observers say that Bren is especially eager to control the destiny of land near the Spectrum. An expansive business park, the Spectrum has grown from 250 companies with 2,500 employees 10 years ago to nearly 2,000 companies with more than 32,000 employees today. The businesses are scattered across a 3,600-acre area surrounding the El Toro Y, where the San Diego and Santa Ana freeways intersect.
“They want to protect the Spectrum and control that land,” said Jeffrey W. Cole, president of the local chapter of the National Assn. of Office and Industrial Properties, a trade group with more than 200 corporate members. “So they get rid of land they can’t do anything with and get developable land and possibly an airport there--it’s a win-win for them,” he said.
In addition, Irvine Co. would regain property that was part of its original holdings. The federal government paid the company $950,000 for the initial 2,318 acres used to build the Marine base, according to a condemnation decree filed June 30, 1944, in U.S. District Court in Los Angeles.
“I think the thing that initially intrigued us about the concept is that we owned that property at one time, so historically it makes sense,” said Gary Hunt, executive vice president of corporate and legal affairs for the company.
Besides the Spectrum, Irvine Co.'s current holdings include Irvine Ranch--what remains of a 108,000-acre tract that James Irvine and his partners assembled from three Spanish land grants in the 1860s. (They paid $25,000.) The company also owns the Newport Beach Fashion Island and Tustin Market Place shopping centers, growing business developments such as Newport Center, and posh hotels such as the Four Seasons. The total value of the company’s assets is estimated at $4 billion.
The company has created 12 master-planned communities, including the city of Irvine itself. Those communities are home to 175,000 people, 65% of whom work at businesses located at Irvine Ranch.
Last year, Irvine Co. completed the first successful public offering of a real estate investment trust comprising only of Orange County properties. The company sold its apartment division, raising $200 million from investors.
Bren still holds 92% of the company’s outstanding shares. That means he appoints all board members and controls all aspects of the company’s operations and plans.
Born in Beverly Hills, Bren grew up amid the new Southern California wealth created by the movie industry. His father, the late Milton Bren, was a Hollywood producer who made a small fortune investing in real estate, including swaths of land along Sunset Boulevard in Los Angeles.
The son, who attended the University of Washington on a skiing scholarship, later went into real estate with Donald Bren Co., a home builder, and later joined with a group of investors to purchase Irvine Co. in 1977 from the Irvine family foundation for $337 million.
Even then, the aggressiveness and drive that he has continued to display were apparent: Donald Bren beat out Mobil Corp., one of the world’s largest corporations, in bidding for the Irvine Co.
In 1983, he purchased Joan Irvine Smith’s 11% stake in the company, prompting years of litigation after Smith maintained that her share was worth much more than Bren had paid. She became one of his toughest adversaries. The courts finally forced Bren to pay her more, but not as much as she wanted.
The company has completed its massive projects in a business environment that has grown increasingly less tolerant of big developers, building thousands of homes and commercial properties.
Bren, because of his company’s vast suburban holdings, has been called a “horizontal Donald Trump” and is estimated to have a personal fortune of about $2 billion. Bren’s billions haven’t been used to pursuit a Trump-like lifestyle, however. His Newport Beach home is said to be modest except for some museum-quality paintings, mostly abstract Expressionist works.
Given Bren’s reputation for being a perfectionist and an executive who maintains tight control, that the company has finally become involved in the Marine base debate was no surprise to many.
In March, Orange County Supervisor Thomas F. Riley was asked why the Irvine Co. was so quiet in the debate over El Toro. “Donald Bren is a pretty smart person,” he said at the time. “They are going out to see what’s best for the Irvine Co.”