Drives to Digs Drives to Digs

ocbj.com
ORANGE COUNTY BUSINESS JOURNAL
$1.50 VOL. 35 NO. 43
LUXURY HOMES
46 Acres On Market in Laguna Beach
T H E C O M M U N I T Y O F B U S I N E S S TM
REAL ESTATE: Laguna Terrace mobile home park on verge of “new” era
By MARK MUELLER
Sign of Improved
Market
page 18
Laguna Terrace Park is up for sale.
The 46-acre mobile home park, located on a set of rolling
hills just off South Coast Highway, could fetch offers in excess
of $50 million.
It counts a mix of full-time and part-time residents with
leases on parcels for a variety of ranch-style, double-wide units.
It’s the first time the park—near the Montage Laguna Beach
resort—has been listed for sale.
A deal for the property, one of the last and largest mobile
Laguna Terrace 74
Laguna Terrace: 157 custom-built
units on leased land
Drives
to Digs
T
page 27
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MAIL TO:
Donald Sun: paid reported
$2 million for AVP
REAL ESTATE: National builders
back with top dollar for prime parcels
By MARK MUELLER
SPECIAL REPORT
Finance
Land Prices Up With
FivePoint Sales on Deck
OCTOBER 22-28, 2012
Donald Sun is taking his talents to the
beach.
That’s no short trip for the son of David
Sun, cofounder of Kingston Technology
Corp. The younger Sun had been director
of flash planning and procurement at the
Fountain Valley-based company, the
world’s largest third-party maker of drives
and other memory devices with an estiAVP 73
Homebuilders are increasing the pace and price of
land buys in and around Orange County in a trend
that stands to be highlighted by a pending sale that
could be one of the priciest deals in several years.
FivePoint Communities Management Inc., the
Land 65
Hoag, St. Joseph Call
New Venture Covenant
HEALTHCARE: Regional network
could add other providers in future
By VITA REED
Hoag Memorial Hospital Presbyterian and St.
Joseph Health have settled
on a name for the new company they are forming to operate a regional healthcare
network: Covenant Health
Network.
“We think the name
Covenant means a lot and
says a lot,” said Richard
Afable, Hoag’s chief executive, during a break from the
Newport Beach-based hospital operator’s annual
healthcare forum held at the
Hyatt Regency Irvine last
week.
“Covenant is a promise, a
sacred promise to work collaboratively and together to
accomplish certain common
goals,” Afable said.
The two hospital operaCovenant 74
Proctor: getting new
company up and running is first focus
Afable: new name
means “promise to
work collaboratively”
Street Smarts Behind Endeavor’s Final Journey
Anaheim Engineering, Construction Firms Got Roads Ready for 250-Ton Load
By CHRIS CASACCHIA
The retired Endavor space shuttle has finally
taken up residence at the California Science Center in Los Angeles.
Here is a street-level story that you didn’t see
about the flying machine’s recent journey
through the city: The meticulous job of analyzing
and preparing roads, bridges, sewers and storm
drains to withstand the 250 tons of Endeavor and
its tow vehicle were carried out by two Orange
Point men: Volchok, Plump look over job’s details
as Endeavor makes way on street behind
County companies.
Plump Engineering Inc. and Encon Construction Services Inc., which share headquarters in Anaheim, began planning Endeavor’s
12-mile journey shortly after landing the contract
from Belgium-based Sarens Group NV in late
July.
Financial details of the contract were not disclosed, but California Science Center—which is
preparing the shuttle for a permanent display—
Shuttle 74
Laguna Terrace
74 ORANGE COUNTY BUSINESS JOURNAL
Local breaking news: www.ocbj.com
senting Laguna Terrace’s residents said earlier this summer they were still interested in
buying the land, despite legal complications
that arose the past few years after Stephen
Esslinger attempted to subdivide the property as part of the effort to convert it to resident ownership.
Some potential buyers could see the property as a long-term redevelopment opportunity, according to CBRE’s Lustig-Bower.
That could drive up the price of the land by
a significant amount, considering the property’s location.
Orange County has seen its share of pricey
mobile home park sales in recent years.
佡 from page 1
home parks in Laguna Beach, is expected to
be completed by early next year. A sale will
take Laguna Terrace’s ownership out of the
hands of the family of the property’s original
developer, Paul “Doc” Esslinger.
Esslingers
Esslinger and his wife bought the land in the
1940s and developed the property in the
1960s, according to local reports. Laguna Terrace had been managed and run by their grandson, Stephen Esslinger, for the past 25 years
under terms of a long-term ground lease.
Stephen Esslinger, who had initiated an unsuccessful attempt at converting the park to
resident ownership a few years ago, died in
March.
“With Stephen gone, the family feels it is
time for the park to begin a new era under
new ownership,” said Rob Coldren of Hart,
King & Coldren, a Santa Ana-based law
firm representing the seller.
Brokers with the manufactured housing
and multihousing groups of CBRE Group
Inc. have the listing for Laguna Terrace,
which is going to market unpriced. Offers for
the property, located at 30802 S. Coast Highway, are due by the end of November.
Brokers involved in the deal declined to
speculate on the likely sale price for the property, noting several factors could have a big
Shuttle
佡 from page 1
estimated the cost of getting it there could top
$10 million.
Getting the route ready for Endeavor’s
final ride from Los Angeles International
Airport to the science center meant getting
a grip on infrastructure above and below
city streets.
Much of the work involved systems of
pipes that were installed in the 1920s and
’30s. Some have been corroded and unused
for decades.
Plump Engineering is considered an expert in heavy lifting. Its portfolio includes
supporting the 105-mile transportation of an
860,000-pound granite boulder from a
Riverside quarry to the Los Angeles County
Museum of Art, and moving 800,000-pound
vessels from refineries in Long Beach to
San Onofre.
Target Sectors
The company sees about $5 million in annual revenue and targets the aerospace and
manufacturing sectors. It also does survey-
Covenant
Laguna Terrace: mobile home park cuts swath through hills overlooking Montage Laguna Beach
impact on Laguna Terrace’s value, including
a buyer’s long-term plans for the site.
Comps
The 37-acre Huntington Shorecliffs mobile home park in Huntington Beach, which
traded hands in 2008, was recently valued at
more than $54 million following a refinancing of its debt earlier this June.
A sale of Laguna Terrace—which had a
$32.7 million mortgage tied to it as of last
year, according to property records—appears
likely to get a higher price than Huntington
Shorecliffs’ latest valuation.
CBRE brokers call Laguna Terrace “one
of the premier mobile home parks in the
Slow go: workers of Plump Engineering,
Encon Construction monitored Endeavor’s 2mile-an-hour journey from LAX
ing, plant-processing analysis, water treatment, and traditional structural, civil, mechanical and electrical engineering.
Plump Engineering partners with
Encon—a general contractor that specializes
in heavy logistics coordination, design and
build—on many projects in the commercial,
industrial and retail sectors.
Encon sees about $15 million in annual
revenue.
“We do big projects, but we usually don’t
have thousands of people cheering,” said
Encon President Michael Volchok.
tors announced the creation of what will be
known as Covenant in August.
Deborah Proctor, chief executive of Orange-based St. Joseph Health, referred to it as
“a new kind of structure that you probably
haven’t seen before.”
from each hospital operator and “a host of
consultants, legal and otherwise, who are assisting us in this filing,” Afable said.
One regulatory hurdle was cleared last
month when St. Joseph and Hoag received
clearance from the Federal Trade Commission.
Covenant will start operating at Hoag and
St. Joseph facilities, and other area hospitals
could become part of the network later on.
State Attorney General
Covenant’s next step is to file paperwork to
get regulatory approval from California Attorney General Kamala Harris’ office, which
is required to create the nonprofit corporation.
That filing is pending and could take place
this week.
A decision from Harris’ office is expected
in several months. Officials have said they
hope to have regulatory approvals, management and a board of directors in place to start
operations in early 2013.
Covenant has had in-house legal teams
“Most Important”
“The most important thing for us to do first
is to get Covenant Health Network up and
operational and delivering on its promise,”
Proctor said.
Covenant won’t know the “appropriate
partnerships to create” until it’s “better designed,” she said.
Afable and Proctor have said both Hoag
and St. Joseph retain its own identity.
“Hoag will continue to be Hoag—the name
won’t change; the organization will continue
to be led by the same people,” Afable said in
佡 from page 1
OCTOBER 22, 2012
United States,” and said they expect the
property to get a good amount of national
and international investor interest.
A new owner is likely to change monthly
rents in the $3,000-to-$4,000 range.
“We expect to see strong competition from
both institutional and private investors—this
kind of property just doesn’t come along
every day,” said Laurie Lustig-Bower, a
broker in the Los Angeles office of CBRE
who has the listing with colleagues Vince
Reynolds and Norm Sangalang, both of the
brokerage’s San Diego office.
Still Interested
Members of the association board repre-
The Endeavor project included pipe stress
tests, analyzing soil pressure, and mapping
the exact route of the transport vehicle down
to the inch. The two firms surveyed every
point where supportive steel plates would be
placed along the route and welded together.
They removed and later replaced the center
median on Lincoln Boulevard, a main artery
on the route. They also crafted a traffic and
pedestrian control plan.
Finding nearly 1,800 metal plates to pave
Endeavor’s path presented its own challenges. With every plate leased in Greater
Los Angeles, the companies set out to find
suppliers, metal makers and contractors in
San Diego, Phoenix, Las Vegas and elsewhere.
The 1-inch plates, which are 8 feet by 10
feet and weigh about 3,300 pounds, provide
support and distribute the vehicle’s weight.
Some 250 truckloads of plates totaling 9
million pounds of steel were dropped off at
specific sites along the route. They were
transported in shipments of 12.
“It took us roughly a week to place them
down,” said Plump Engineering principal
Richard Plump.
Plump walked a few paces ahead of En-
August.
St. Joseph is a $4.4 billion Catholic hospital operator. Its Southern California facilities
include St. Joseph Hospital-Orange; St. Jude
Medical Center in Fullerton; Mission Hospital, with campuses in Mission Viejo and Laguna Beach; and Apple Valley’s St. Mary
Medical Center.
Hoag, a $1 billion not-for-profit hospital
operator, is made up of its main Newport
Beach hospital and a second campus in
Irvine.
Beyond Hospitals
Covenant also will deliver healthcare services outside beyond hospitals, said Darrin
Montalvo, St. Joseph Health’s executive vice
president, chief financial officer and regional
executive vice president for Southern California, in an interview with industry newsletter Becker’s Hospital Review.
“We are taking services historically centered in an acute-care campus out to the community so we can provide services where
Capistrano Shores
Capistrano Shores, a stretch of land with
about 90 oceanfront beach cottages on the
northern tip of San Clemente, sold in 2008
for an estimated $100 million in one of the
larger land deals of the year.
The beach cottages, which had operated as
a mobile home park, were acquired by the
community’s homeowner’s association,
Capistrano Shores Inc.
This summer saw a nearly 23-acre property in Huntington Beach known as the Rancho Huntington Mobile Home Park trade
hands for about $13.1 million, or about
$570,000 per acre, according to brokerage
records.
An undisclosed buyer bought the Huntington Beach property, which counts 194 mobile home spaces. ■
deavor through the streets of South Los Angeles and Inglewood for nearly the entire
three-day trip.
“I had less than eight hours sleep” over
the three days, he said. “It was pretty brutal.”
The companies had some 65 employees
and subcontractors—equipped with forklifts, trucks and other heavy equipment—
trail the shuttle caravan if something didn’t
go as planned.
Smooth Ride
It turned out be a pretty smooth ride as
Endeavor crept along the route at about 2
miles per hour. At full throttle the shuttle
blasted through space at 19,000 miles per
hour. It spent 299 days in space, traveling
more than 122 million miles in its 25 missions.
Both companies view the Endeavor move
as a signature project. Publicity boomed
with the around-the-clock coverage during
the shuttle’s three-day journey that ended in
the afternoon hours on Oct. 15.
“When we got this project, we thought
this could lead to more lucrative projects,
and a bigger profile,” Plump said. ■
people live and work,” Montalvo told
Becker’s.
St. Joseph and Hoag have been focused primarily on laying the groundwork for
Covenant’s operations and getting their work
forces ready for the new company in the
weeks since the plan was announced.
“A lot of focus had to be on getting the actual definitive agreement done,” Proctor said.
Cultural Aspects
The operators are starting to look at the cultural aspects of Covenant with an eye on
“what’s the culture we want for the future
rather than how does the Hoag culture compare to the St. Joe’s culture,” she added.
A focus on selling Covenant’s healthcare
services to businesses is expected to come
once regulatory approvals are in hand.
Afable noted at the time the new venture
was announced that some employers were
moving toward buying their healthcare benefits from what he said were “networks of
care.” ■