Donald Bren, 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 is replacing IAC 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 senior executive to leave 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 the company in 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 Irvine Co., which owns 54% of IAC stock.
But Mead says 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.
IAC also announced Wednesday that it had purchased Thompson Residential Co., a development company with 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 the company as senior vice president in charge of apartment development off the ranch. Two other Thompson founders have taken roles with IAC as vice presidents. Another position responsible 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 executives said. The firm is also looking at acquisitions in San Diego.
IAC’s expansion mirrors the more aggressive course charted by Irvine Co. in the last year, which also purchased properties in the Silicon Valley and San Diego.
The company also released its fourth-quarter earnings Wednesday. For the period ended Dec. 31, funds from operations--a key indicator of the performance of a real estate investment trust, an investment company that holds land--increased 27% from the year before to $19.1 million. Net income also increased 41% to $5.6 million from the fourth quarter of 1995.
The investment trust’s stock increased just 25 cents to close at $27.125 on the New York Stock Exchange.