Hospital Chain Buys 12 Irvine Co. Shares for $4.8 Million
A hospital chain has bought 12 shares of Irvine Co. stock at $400,000 each, seizing a rare opportunity to grab a stake in Orange County’s largest landowner.
The nation’s second-largest Catholic-owned hospital chain, Catholic Healthcare West of San Francisco, purchased the Irvine Co. stock for a total of $4.8 million.
“We really believe it’s an excellent long-term investment,” said Jesse Bean, treasurer for Catholic Healthcare, adding that the company would hold on to the shares for at least 10 years.
“The Irvine Co. is very, very impressive. And everything we’re hearing about the real estate market in Orange County is very positive,” he said Wednesday.
As a minority shareholder, Catholic Healthcare will not have any say over the privately held Irvine Co.’s real estate operations because it will not have voting rights.
The nonprofit chain of 25 hospitals manages a $1.2-billion investment pool and reported revenue of $2.4 billion for the year ended June 30. It recently acquired hospitals in Long Beach and San Bernardino as part of an expansion into Southern California.
The Irvine Co., owner and developer of a wide swath of land that covers much of Orange County, is more than 90% owned by Donald L. Bren, the company’s chairman. There are 3,722 shares outstanding.
The hospital is buying shares once controlled by Howard P. Marguleas, an Irvine Co. director who decided to sell his 5.05% minority stake--188 shares--in the land company two years ago.
Originally, Marguleas put his shares on the market for $500,000 each, below the appraised value at the time of $617,000 a share. The real estate slump and Orange County’s bankruptcy filing prompted him to lower per-share prices even more.
Marguleas said he needs the cash to help his troubled Sun World International, a Bakersfield-based agricultural firm.
“Catholic Healthcare considered the Irvine Co. to be one of the best investments they could make long term,” Marguleas said, “particularly with the growth and stability coming to Orange County. They have terrific confidence in Don Bren.”
So far, Marguleas has sold about 35% of his Irvine Co. stake. Last year, Claremont-McKenna College, a private school near Pomona, bought $5 million worth of shares from Marguleas at $400,000 a share.
“With the easing of the problems due to the Orange County bankruptcy, we see tremendous interest recently from individuals and funds,” said Marguleas, who was one of the original group of investors, along with Bren, who bought the Irvine Co. in 1977. He said the rest of his stake could be sold in the next 45 days.
The shares are being sold through Danzi Capital Group in Newport Beach. “Orange County is looking great. This shows great confidence in our county,” said Mike Danzi, managing director of the investment banking firm.
