Consolidation Will Unite 2 O.C. Real Estate Giants
Santa Margarita Co., the ranching and land development concern founded by two Orange County pioneers more than 100 years ago, said Wednesday it will merge with the county’s biggest apartment developer and manager, creating one of the state’s largest real estate companies.
Santa Margarita and Western National Group had already tested a consolidation last summer by merging their home-building operations. “They have had a six-month engagement,” said Irvine real estate consultant Ken Agid. “Now they have decided to get married.”
Santa Margarita, which has been a driving force behind the rapid growth in southern Orange County, is the county’s second-largest landowner behind the Irvine Co. It developed Rancho Santa Margarita, a fast-growing planned community, and the adjacent Las Flores planned community. It also manages the 40,000-acre Rancho Mission Viejo cattle ranch.
Western National, based in Orange, owns and operates 71 apartment complexes containing 10,500 units in Orange County. It also manages 93 complexes with 17,000 units in California, the Northwest and Southeast.
The two privately held companies did not disclose terms of the merger except to say that they expect it to be completed in March. However, observers said that the deal involves holdings easily valued in the billions of dollars.
“Santa Margarita Co. and Western National Group share many of the same goals,” Anthony R. Moiso, president and chief executive of Santa Margarita Co., said in a statement. “By combining our respective business and fiduciary expertise, we have positioned Santa Margarita Co. for optimum diversification and increased opportunities for expansion.”
Moiso, who declined to be interviewed, will become chief executive and a director of the new company, while Richard J. O’Neill will be its chairman. Michael K. Hayde, a Western National managing partner, will become chief operating officer.
No employees will be laid off as a result of the merger, a Santa Margarita spokeswoman said. Santa Margarita has about 140 workers and Western National about 100, with an additional 840 working for the company nationwide.
The O’Neill-Moiso family and Santa Margarita Co. have deep roots in Orange County. Moiso and O’Neill are descendants of Richard O’Neill, an immigrant cattleman who bought the 230,000-acre Rancho Santa Margarita in the 1880s. The property extended from Aliso Creek in Orange County to Oceanside in San Diego County.
Nearly half of the land was purchased by the federal government during World War II to establish Camp Pendleton. In 1963, grandson Richard J. O’Neill founded the city of Mission Viejo on 10,000 acres of the remaining land and built the first homes on the property.
In 1983, great-grandson Moiso began developing Rancho Santa Margarita, which now has a population of about 21,000.
The O’Neill-Moiso clan has been active in Orange County political and social circles for a century. Richard J. O’Neill, a former county and state Democratic Party chairman, donated the land for O’Neill Regional Park in Trabuco Canyon.
Moiso is active in Orange County civic and charitable groups ranging from the Sheriff’s Advisory Council to the Boy Scouts.
Under Moiso’s leadership, Santa Margarita Co. built more than 7,000 homes in Rancho Santa Margarita. The company is wise now to diversify its operations, said John Shumway at Market Profiles, a residential research consulting company in Costa Mesa.
“There’s a finite amount of land left in Orange County and a finite list of master-planned communities with land still available,” Shumway said. “Also, Orange County isn’t growing as fast as it has in the past.”
For Western National, the merger provides financing to help it grow, he said. Santa Margarita should have no problem financing projects, especially with additional funds now coming from the California Public Employees Retirement System. CalPERS is contributing $20 million to a joint venture with Santa Margarita to develop Las Flores.
“Over the past couple years, Santa Margarita has had trouble selling its home sites,” said Louis Masotti, director of the Real Estate Management Program at UC Irvine. But as Southern California recovers from the lingering recession and the real estate industry picks up, he said, home building will lead the way.
Masotti said Santa Margarita may be following the lead of Orange County’s largest landowner, the Irvine Co., which last year sold public investors a stake in its apartment properties through a real estate investment trust.
Western National, in fact, had filed a statement with the Securities and Exchange Commission to establish a REIT, but the company shelved the proposal as rising interest rates depressed the market.
A spokeswoman for Santa Margarita said Wednesday that federal and state authorities have approved the REIT, however, and the company may consider offering it when market conditions improve.
The new merged company is expected to operate under the Santa Margarita Co. name and have a board made up of equal numbers of directors from both companies. It will be based in Rancho Santa Margarita, though both companies will keep their present quarters for now.
Times staff writer Debora Vrana contributed to this report.
* SANTA MARGARITA CO.: The O’Neill-Moiso family saga begins a new chapter. D1
* WESTERN NATIONAL: Analysts laud the firm’s leadership, foresight. D7
