J.F. Shea Takes a Big Step by Buying Major O.C. Developer

J.F Shea Co., the Walnut-based building firm, has agreed to purchase Mission Viejo Co., one of Orange County’s pioneer developers of planned communities, it was announced Friday.

The deal is expected to fetch more than $400 million, although terms were not disclosed by Philip Morris Cos., which has owned Mission Viejo Co. since 1972. The purchase will give Shea about 900 acres of undeveloped land in the Orange County communities of Mission Viejo and Aliso Viejo.

But it will have the most impact on Shea’s fledgling Colorado home building operation, which opened in September. More than three-fourths of Mission Viejo Co.’s 4,500 developable acres are in the Highlands Ranch area, a master-planned community south of Denver.

“It’s a significant acquisition,” said Les Thomas, president of the Southern California division of Shea Homes, the company’s home-building subsidiary. “We look at it as providing us great land resources for the future.” Shea executives declined to comment on whether Mission Viejo Co. would keep its name or its 60 employees, who are split evenly between Colorado and Orange County. Thomas said Shea would both build homes and sell land in the three planned communities.

“This is one of the largest transactions for a community developer since the sale of the Irvine Co. It puts Shea Homes on the map as a national builder,” said Michael Meyer, managing partner of the Newport Beach office of E&Y; Kenneth Leventhal.

In March, Philip Morris announced it would sell the real estate unit, which makes up less than 1% of its total sales, to concentrate on its more profitable core businesses of food, beer and tobacco. Rumors of a sale had been circulating since the Mission Viejo Co. stopped building homes in 1989 and began selling off land.

The company was founded in 1963 by a partnership of billionaire real estate developer Donald Bren and south Orange County landowners, the O’Neill family.

Bren later sold his interest and bought the Irvine Co.

Philip Morris made its initial investment in the real estate developer in 1969.