Bren Takes Over Apartment Firm He Founded
Donald Bren, the Irvine Co.’s billionaire chairman, is taking over the publicly traded apartment company he spun off in 1993 and launching a statewide expansion into the Silicon Valley.
“It’s Bren’s company, he founded it and he wants to shepherd it through the next phase,” James Mead, chief financial officer of Irvine Apartment Communities Inc., said Wednesday.
Bren has replaced IAC’s chief executive, Steven Albert, a 25-year real estate veteran who joined the company in April 1995. Albert has no specific plans other than to “devote more time to personal investments,” Mead said.
Albert could not be reached for comment, and no severance package was disclosed.
Albert’s departure from his $275,000 position marks the third time a senior executive has left the company since it went public. Former CEO T. Patrick Smith, who helped take the company public in 1993, left in 1995, and Chief Financial Officer Richard Moran left last November.
Analyst Craig Leupold of Green Street Advisors said Bren’s appointment should heighten some investors’ concern about conflicts of interest, given that IAC purchases land from the Irvine Co., which owns 54% of IAC stock.
But Mead insists that land consultants hired by the board and other voting safeguards are in place to make sure shareholders’ investments are protected.
In a prepared statement, Bren said California’s economic turnaround prompted IAC’s expansion off the 90-square-mile Irvine Ranch, where it owns and operates 52 apartment communities with 13,656 units.
“California’s unfolding economic renaissance has created once-in-a-lifetime opportunities in real estate development, particularly for apartment companies,” Bren said.
IAC also announced Wednesday that it has purchased Thompson Residential Co., a development company that has options on three apartment sites in the Silicon Valley, for $2 million in IAC partnership units.
The company’s founder, William W. Thompson, has joined IAC as senior vice president in charge of apartment development off the ranch. Two other Thompson founders have taken roles with IAC as vice presidents of development and construction. Another position, carrying responsibility for overseeing existing Ranch operations, will be filled shortly, the company said.
IAC should kick off development of its first Northern California project, a 342-unit, $50-million development in Cupertino, this summer. The other two projects are expected to cost $25 million each to develop, company officials said. The firm is also are looking at acquisitions in San Diego.
IAC’s expansion mirrors the more aggressive course charted in the last year by Bren’s Irvine Co., which also purchased properties in the Silicon Valley and San Diego.
The company also released its fourth quarter earnings Wednesday. For the period ending Dec. 31, funds from operations (FFO), a key indicator of a REIT’s performance, increased 27% from the year before to $19.1 million. For fiscal 1996, FFO rose 41% to $68.3 million. The company said occupancy in IAC’s portfolio now stands at 95% and rents have risen more than 5% on half of the company’s units.
“Their financial results have been strong,” said Green Street’s Leupold. “With the resurgence in development, new job creation and rent growth I expect it to continue to be strong throughout 1997 and 1998.”
The investment trust’s stock failed to react to the company’s earnings or Bren’s appointment, rising just 25 cents a share to close at $27.125 on the New York Stock Exchange.
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Irvine Apartment Communities
* Headquarters: Newport Beach
* CEO: Donald Bren
* Business: Publicly traded real estate investment trust
* Properties: 52 apartment communities in Irvine
* Background: Taken public by Irvine Co. in 1993
* Majority owner: Irvine Co. with 54% interest
* Employees: 46
* 1996 revenue: $159 million
* 1996 net income: $19 million
Sources: Bloomberg Business News, Irvine Co.
