Real Estate Giants Call Off Merger : Orange County: Santa Margarita Co. and Western National Group blame market downturn.

Blaming the real estate downturn, two Orange County real estate giants, Santa Margarita Co. and Western National Group, have called off their planned merger.

Announced in January, the merger of major landowner and developer Santa Margarita Co. and apartment manager Western was expected to create one of the state’s largest real estate concerns.

But the privately held companies “were unable to meet the goals” set as requirements for the merger, said Diane Gaynor, spokeswoman for Santa Margarita, Orange County’s second-largest landowner behind the Irvine Co.

“Both parties agreed the current economic climate, both the prolonged real estate recession and the [Orange County bankruptcy filing], were not conducive to the merger they had anticipated,” she said.

She declined to elaborate on the financial details.

Founded by two Orange County pioneers more than 100 years ago, the ranching and land development concern Santa Margarita Co. is headed by Anthony R. Moiso, a great-grandson of the company’s founder. He declined to be interviewed.

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. Michael K. Hayde, a Western National managing partner, could not be reached for comment.

Real estate analysts said the merger might have been more than either company bargained for.

“Santa Margarita took them in as a money partner and then Western National just said ‘Hey, this is too much money for us,’ ” said Alfred Gobar, a real estate consultant in Brea. “It’s too bad, I thought it was a good deal.”

But Gaynor disagreed, saying the merger was expected to be a 50-50 partnership.

This year Santa Margarita has laid off 16 of its 72 full-time real estate positions, mostly because of the planned merger and recession.

Donald E. Moe, senior vice president of governmental affairs, resigned from the company last month to pursue other interests.

Last year, the companies merged their home-building operations, creating the San Juan Group. That company will not be affected by the merger, Gaynor said.