A group of investors with “an international perspective” bought the house built by a former Irvine Co. boss on the promontory overlooking the entrance to Newport Bay, listing agent Rob Giem said. Quatre Saisons Real Estate LLC, which lists its address in a Pasadena office building, sees the Corona del Mar home it bought near its $28 million asking price as a bargain investment that will appreciate over time.

“They’re very bullish on property in this area,” said Giem, a high-end agent with HÔM Real Estate Group. “They think demand for the best-of-the-best will increase.”

Myford Irvine built the 15,000-square-foot “Hale O Pau Hana” house in 1958, intending to use it as his personal estate. Irvine, who ran the Irvine Co. from 1947 to 1959, died shortly before the triangle-shaped residence with a huge great room, 19-foot-high ceiling and spectacular bay views was completed. It has been home to technology executives Wendy and Rick Aversano since 2000, county records show. The Aversanos equipped the home with two lines for full-motion video conferencing so he could run telecommunications businesses in Florida and New York, Giem had said in 2005.

Read the rest of this entry »

Standard Pacific Chief Financial Officer Andrew Parnes said during this morning’s first-quarter earnings conference call that the beleaguered Irvine-based homebuilder is exploring several “alternative financial and strategic opportunities.” Among them:

“… a merger, business combination or sale of the company.”

Parnes and other top Standard Pacific execs immediately moved on to other financial matters without elaborating. Nor did the matter come up during the more than 30-minute question-and-answer period afterward. The company’s 10-Q filing with the Securities and Exchange Commission contained this comment on Page 47:

“As a result of these uncertainties, and to help position the Company to weather the current market downturn and to be prepared to take advantage of market opportunities when the market strengthens, our Board of Directors has initiated a process to examine alternative financial and strategic opportunities available to us to provide the Company with possible additional liquidity and operating flexibility. These alternatives may include the sale of equity or debt securities, debt exchanges, the sale of additional non-core assets, or a merger, business combination or sale of the Company. This process may not result in any prospective transaction, or any specific type of transaction, and our Board of Directors may determine that any prospective transaction is not in the best interests of the Company.”

Parnes’ comment came amid a mixed report on the company’s first-quarter earnings.

On the one hand, losses are up 431%, but the company increased its cash by $110 million. Its ability to borrow money is restricted because of an excessive debt-to-equity ratio, but the exceptions to those restrictions will allow the company to borrow enough to pay bills not covered by its increased cash. The company is in technical default on its loans, but lenders are negotiating.

Company officials continue to have a dire outlook on the housing market. Problems “continue to reflect the difficult housing conditions in most markets,” company execs said. Among the chief concerns: Lower home prices, increased discounts offered to buyers, rising foreclosures, higher costs for jumbo loans and continued restrictions on low- or no-documentation loans. That has decreased the pool of buyers, and as a result, company officials said, “there will continue to be pricing pressure for the remainder of this year.”

(Updated with better pricing information.)

A Corona del Mar home has been sold for “close, very close” to its $28 million asking price — what’s reportedly the highest price for “an off water property in Orange County,” according to Rob Giem of HÔM Real Estate Group.

The home, known as “Hale O Pau Hana,” is located at 411 Avocado Avenue in Corona del Mar. Giem described the house as …

A long private drive serves as the entrance to the 1.4-acre landmark estate that extends to a bluff overlooking Newport Harbor. The main living areas comprise 15,000 square feet on one level and are designed around the estate’s centerpiece–an open-air palm-lined pool court with a free-form infinity-edge pool and spa surrounded by palms. Vast banks of glass doors surround the entire pool court and open onto the estate’s interior, creating the ultimate in an indoor–outdoor lifestyle. The estate offers numerous high-tech facilities that include an office with telecommunications, networking, and video conferencing, security systems, a 12-seat theater, and a stage with audio and video broadcasting capability. Other facets of this state-of-the-art compound are the 5,000 square-foot subterranean level, made accessible by a commercial elevator, featuring a 16-car garage and workshop, a gym, a secured storage area, and mechanical rooms.

The sellers were technology executives Wendy and Rick Aversano. The buyer is an investment group, according Giem. According to property records tracked by Redfin.com, the home last sold for $4.65 million in ‘88 and has a 2007 taxable value of $13.57 million.

Luxury homes seem to be still moving in the O.C. Here are a few recent sales …

• Anaheim Hills home fetches near-record $6.3 million.
• $35 million paid for actor Nicolas Cage’s Newport Beach home.

But … SoCal ‘prestige’ home-price index relatively flat. Makes you wonder if a well-known Ortega ranch, back on market for $22.5 million, will sell soon.

In the first three months of 2008, Irvine-based homebuilder Standard Pacific Corp. reported this morning before markets opened that it boosted its cash supply and paid down its debt in the face of a $216.4 million first-quarter loss. The average price of homes the company sold in Southern California fell 10% in a year to $629,000, according to the company press release. In the first 45 minutes of stock trading this morning, Standard Pacific shares fell 21% to $2.99, a low not seen since January.

Why the squeamish investors?

• A quarterly net loss that was up 431% from the $41 million it posted in red ink for the first quarter a year ago.
• “Impairments,” or losses due to the declining value of land and homes the company owns, totaled $192.3 million before taxes.
• Homebuilding revenues were little better than half of the amount generated in the first quarter last year.
• Closed escrows fell 38% from the year-ago period to 1,036.
• New sales contracts fell 30% to 1,245 new home orders.

On the plus side, however:

• The company’s cash position increased to nearly $329 million, up form $219 million at the end of 2007. This will allow Standard Pacific to fund its short-term cash needs, the company said.
• The quarterly loss, while up significantly from last year, was less than half the amount of red ink in the fourth quarter of 2007.
• Although the company continued to be in violation of covenants with lenders, its bank group agreed to extend a previous waiver of any default to Wednesday. It has a tentative agreement to extend that waiver until August.

Jeffrey V. Peterson, who became the company’s new chairman, CEO and president in March, said:

“In the first quarter, the Company’s management team pursued, with a heightened sense of urgency, initiatives to reduce inventories, carefully manage cash and reduce debt. The Company continued to make progress with these initiatives in the first quarter, increasing our cash position and improving net new home orders and quarter-end backlog from year end. We also paid down $22.5 million of the Company’s notes and $127 million of joint-venture debt.”

Online market tracker Zillow reported that roughly half of O.C. homeowners who bought their residence in 2005 through 2007 owe more for their mortgage than their home is now worth.

Buyers who purchased in 2005 and 2006 were in the worst shape, figures by Zillow.com figures show. They bought at the peak of the market, and their median down payment was just 10% of their home’s value, hence they had less equity to begin with. (Equity is the amount of a home’s value above the amount owed.)

More than 56% of ‘05 buyers were upside down during the first quarter this year. For ‘06 buyers, the number increased to 71%, and 48% of those who bought a home in 2007 were upside down. Here is Zillow’s breakdown of equity numbers for Orange County homeowners in Q1 2008:

Read these other recent stories on upside-down homeowners and distressed homesellers:

• Half of ‘07 low-end O.C. homebuyers are upside down
• Are you upside down in your home?
• Emblem of O.C.’s $600,000 home market, now a short sale
• Home appraisers can bite my butt
• Foreclosures seen as O.C.’s hottest-selling homes

Long-term readers of this blog will recall much discussion two years ago or so about investor Tom Barrack’s late 2005 interview with Forbes magazine. In the piece, he thought real estate was pretty much toast, saying, “There’s too much money chasing too few good deals, with too much debt and too few brains.”)

Well, guess who’s back dabbling in high-profile, California property? Read this press release …

Michael Jackson today announced that the foreclosure sale of his Neverland Ranch property scheduled for this week has been cancelled by Colony Capital, LLC, which just acquired the existing loan on Neverland Ranch from an affiliate of Fortress Investment Group. Mr. Jackson said, “I am pleased with recent developments involving Neverland Ranch and I am in discussions with Colony and Tom Barrack with regard to the Ranch and other matters that would allow me to focus on the future.”

Need background on the Neverland ranch’s money woes? CLICK HERE!

Stephen C. Duringer at Duringer Law Group PLC in Anaheim is a longtime attorney who specializes in landlord tenant law. He also owns residential and commercial rental properties throughout California. He is past president of the Apartment Association of Orange County and serves as a Superior Court judge pro tem. With dueling pro- and anti-rent control measures on the next state ballot, expensive rents and a slowing economy, Duringer provided this take on the state of the apartment biz … 

Us: What are some of the changes you’ve seen in the apartment industry since you started?
Duringer: The rental housing industry has experienced strong and sustained growth over the past 20 years. Even with the current revaluation cycle, multifamily properties have maintained their values. Throughout the state we’ve seen troubling increases in governmental oversight of housing, expansion of rent control jurisdictions and eviction controls. These cities quickly become stagnant, eliminating market incentives and motivations for investment and improvement by owners. A drive through many parts of Los Angeles reveals dilapidated housing, graffiti, crime and infrastructure in disrepair, and is a stark reminder why we don’t want that here in Orange County. A more troubling trend is an increasingly confrontational relationship between landlords, tenants, and fair housing advocates. Litigation is rampant. Disputes, that often can be resolved with a phone call now end up in court, increasing the cost of doing business and creating a climate of distrust. Most troubling, I’m seeing the next generation of owners, the children of the current owners, not wanting to get into the business because of the adversarial and confrontational climate.

Us: You’ve said Orange County has been insulated from a lot of these trends. Why?
Duringer: Orange County recognizes the importance of a strong rental housing industry. The continued growth and vitality of OC is dependent on our ability to house our most important asset, our employees. A readily available pool of talent allows our business community to continue to thrive and to prosper. The Apartment Association of Orange County has been very effective in working with local cities in proactively eliminating the problems generally associated with rental housing. The private sector is clearly the most qualified, and has the greatest incentive, to improve and enhance the housing stock. By educating owners and managers through courses offered by the AAOC, most of the issues facing other parts of California are either non-existent or are extremely rare here in Orange County. Owners learn effective tenant screening practices that effectively keep the bad elements out of our buildings, and out of our neighborhoods. Owners and tenants generally work well together in Orange County. Code enforcement officers here in O.C., for the most part, recognize that the vast majority of owners are responsible business persons, and truly desire to maintain their properties. Although not perfect, Orange County’s rental housing community is doing a very good job.

Q: What are you hearing about the most these days from landlords? Read the rest of this entry »

The Register’s ace home design and gardening guru Cindy McNatt, author of the ‘Homebody’ blog (CLICK HERE), joins us with must-read ideas for those destined for a weekend fixing up the house …

• Rent like you really mean it

• Art and other hang ups

• Love red? Click here

• New DIY drapery store in Costa Mesa

• Mixed up flooring materials

The National Multi Housing Council says large apartment complexes aren’t seeing a lot of competition from condos and homes now coming onto the rental market.

“Even though there has been an increase in the number of condo and single-family rentals, these properties do not typically compete for the same renters as professionally-managed apartments,” says Mark Obrinsky, NMHC’s chief economist. “In fact, professionally-managed properties may become even more desirable in the current market as renters of many of these individually-owned condos and houses find themselves without housing because the owners of these properties have lost the property to foreclosure.”

The mortgage meltdtown also appears to have put the brakes on tenants moving out to buy homes. Thirty-one percent of apartment industry executives surveyed nationwide said they have seen a big decrease in the number of renters leaving to become homeowners. That compares to 22% six months ago.

Another 52% in the latest survey said they noticed a small drop in move-outs due to home purchases, down slightly from 53% last October. (CLICK HERE for the full survey.)

Related items:

• Bad O.C. economy hits 1-bedroom apartments
• Foreclosure refugees head for O.C. apartments
• O.C.’s high-rent districts suffer higher apartment vacancies

Late April stats from DataQuick show a modest slowing in the depth of O.C.’s homebuying slump. Completed sales activity was down 31% vs. a year ago for the 22 business days ended April 22. If that holds, it’ll mean April had O.C.’s slowest rate of sales decline since July, just before the credit crunch zapped the ability to get easy mortgages.

But just 10 of 83 O.C. ZIP codes had year-over-year sales gains. (ZIP-by-ZIP data IS HERE!) Plus, April will certainly be the 31st straight month where O.C.’s buying pace failed to meet last year’s activity levels. (See chart of the losing streak above of how April would shape up, if trend holds for full month.)

Do note, though, the latest inventory stats from Steve Thomas of Re/Max that show O.C.’s pending deals rising in recent months to a level just below 2006’s buying patterns. That’s a hint that when many of these pending deals close in the coming months, O.C.’s homebuying losing streak may come to an end.

DataQuick’s median price continues to run near a half-million bucks, one-fifth less than last June’s peak. (How do other indexes see O.C. pricing? CLICK HERE!) And here’s a look at the rest of the market, for the 22 business days ended April 22, by key slices:

Emaar, the real estate giant from Dubai, is replacing veteran local builder Larry Webb as CEO at John Laing Homes in Newport Beach. Webb and an investor group made a well-timed sale of Laing to Emaar near the home market’s peak in mid-2006. A company statement says ….

Symbolizing John Laing Homes’ ongoing commitment to growth in the United States, Robert Booth will assume the position of Chief Executive Officer of John Laing Homes effective May 21st. Larry Webb, who has served as CEO of John Laing Homes since 1995, will remain with the company to help with the leadership transition through late May.
“Larry’s leadership and passion have helped make John Laing Homes an industry leader and laid the foundation for future growth,” said Robert Booth, who is also Managing Director of Emaar Canada. “We’re grateful for all of Larry’s contributions, and excited to pursue new opportunities for growth.” The transition to new leadership will take the partnership between John Laing Homes and Dubai-based Emaar Properties to a new level as John Laing Homes continues its transition from a regional homebuilder to a national homebuilder.

Last November. I had a chat with Webb that was the basis for a Register column …

If timing is everything, Larry Webb and his crew at John Laing Homes might be the smartest guys on the block. A year and a half ago – “the good old days” in real estate life – Laing from Newport Beach was sold to Emaar, a real estate giant from Dubai for a billion bucks.
You think that such generous pricing for a builder in tough markets like California and Colorado would be available today when U.S. homebuilder stocks, as a comparison, have been roughly sliced in half since that sale?
So I needed to know: What did Webb and the investor group that owned Laing know? Did they somehow foresee the oncoming exit of loan money and homebuyers? “I had no idea that the market would do what it did,” he says.

To read more of the column, CLICK HERE; or to see a snippet of Laing’s financial challenges, CLICK HERE.

California Coastal Communities Inc., the developer of the shore-view homes overlooking the Bolsa Chica wetlands, said in its latest earnings report today it expects the housing downturn to continue “throughout the remainder of 2008 and into 2009.”

The forecast comes amid mixed news. On the one hand, the Irvine-based company continues to slash prices for homes it’s building in Lancaster and the Inland Empire, according to a company press release. It’s available supply of cash has dwindled to $1.2 million during the first three months of the year, down from $24.3 million in the same quarter of 2007.

But nine homes in the company’s Brightwater project in Huntington Beach’s Bolsa Chica preserve (see photo) went into escrow in March with an average sales price of $1.8 million. The company maintains it has low carrying costs for the project and expects profit margins of 30% to 40% on those homes once the market turns around. But that turnaround remains elusive:

“The results for the first quarter of 2008 continue to reflect the continued weakness in the housing market, which has been compounded by difficulties in the mortgage lending industry prompted by the collapse of the subprime lending market that have resulted in more stringent lending standards, higher interest rates on jumbo mortgages and tightening of credit available to many homebuyers. Further, potential homebuyers are more cautious about purchasing a home due to uncertainty about the future direction of home prices, their ability to sell existing homes, and the appearance of an economic recession. In view of present circumstances, the Company expects the real estate market downturn to continue throughout the remainder of 2008 and into 2009.”

Net loss totaled $700,000 in the first quarter this year, compared to a $3 million loss in the same quarter a year ago. The reduction in red ink is due primarily to the absence of “impairments” on assets whose value has shrunk because of the slump.