Newhall Land venture misses loan payment

Breaking News from the Los Angeles Business Journal: The joint venture of homebuilders that is planning to build Newhall Ranch, a 21,000-home development in the Santa Clarita Valley, has missed a payment on its $1.1-billion loan.

From the LABJ: "LandSource, a venture of three homebuilders, defaulted April 22 on a first-lien loan it received as part of a $1.55-billion refinancing in March 2007 led by Barclays Capital Inc. and syndicated with 100 lenders."

More: " '[LandSource] did go into default but they are still talking to the lenders about restructuring the debt or modifying the terms,' said Tamara Taylor, a spokeswoman for LandSource. 'The hope is that they will be able to renegotiate the terms of the loan to everybody’s satisfaction.' "

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Hat tip: WA via e-mail.
Photo Credit: Future site of Newhall Ranch development, by L.A. Times.

Comments

[desmo]

This is a huge developement for NL&F, Lennar, Calpers, and the SCV. Keep us informed, I know the Signal and Marlie L. will just brush it off, "Nothing to see here, have you seen the new models with the state of the art......".

[Trab]

With a billion and a half in debt, I have to imagine the banks are going to do everything they can to give them a chance to repay it.

21,000 houses? Where were those people all going to come from?

[peter m]

There is already quite a bit of urban development put up in that area along the 5 fwy north of the 126. last i checked back in 2007 there was a massive new nascent industrial park in place as well as some new housing tracts. It seems as if this region is primed to grow as the corp parks are rapidly expanding into this area. The newhall ranch would be immediately to the west .
I reallly do not see how envornmentalists can fuss over this as the entire areas of nearby santa clarita, valencia, newhall ,saugus, canyon country , castaic, have already been in full blown development last 20-30 yrs but most of it has been relatively orderly with regards to proper environmental planning as compared to ther environmental disaster i've seen out in the IE.
the only problem is increased traffic along the 5 into LA but if they continue to put in the industrail parks infrastructures then maybe in time that area could be a self contained cimmunity with its own localized jobs sectors. It is not being planned with just housing alone as was the IE but to have housing, factories, warehouses, shops, retail, another words a complete integrated community.

La county has over 10 million people, larger that most states, and due to continued heavy immigration it keeps growing. There will be continued pressure to expand and build new communties such as newhall and tejon ranch.
If LA city dosen't like it then where do they propose to build sfh tracts in quality areas for the bulging LA population?
Palmcaster has plenty of available land and a hugh oversupply of REO housing but apparantly is quite undesirable as a livable area for most angelinos. Furthurmore, jobs-generating factories & corps just won't site out there. The settlements along the 5/14/126 fwys seem to be more desirable from a number of standpoints such as proximity to vital transport arteries, better weather , more greenery, mountain recreational access, ect.
As far as the areas ecology very few angelinos actually go out to these remote areas except if they are passing tru on way to the sierras and northern CA, and stop off at fort tejon/frazer park for a breather.
I do not think the areas ecology will suffer much, and will actually be better cared for with quality well- planned communities. Anyway the question is moot because AS LONG AS LA'S population keeps expanding due to HEAVY IMMIGRATION INFLUX THE HOUSING WILL BE PUT UP REGARDESS.
LA CITY LEADERS KNOW THIS BUT WAVE THE GREEN FLAG AS A TOKEN FIG LEAF TO THE ENVIRONMENTALISTS BUT AT HEART THEY FAVOR THE DEVELOPERS.

[Valley Observer]

"the only problem is increased traffic along the 5 into LA but if they continue to put in the industrail parks infrastructures then maybe in time that area could be a self contained cimmunity with its own localized jobs sectors. It is not being planned with just housing alone as was the IE but to have housing, factories, warehouses, shops, retail, another words a complete integrated community."

That could happen, but it won't. It won't be self-contained, and there will be traffic nightmares in both directions, which, because I-5 is California's main artery, will disrupt the California economy and society generally.

The traffic of LA commuters to jobs in Thousand Oaks & Camarillo on 101 is as bad as the flow going the other way, sometimes worse! No matter how many jobs you put in Tejon Ranch, the large pool of workers remains in LA/OC/IE and that means commuting, at least the way things are going to be organized for the next couple of decades. Maybe trains or something eventually, but not now.

[mbob]

Follow the money

[Jason Saunders]

"only problem is a little bit of traffic"

I bet the author of that implication is tied to this mega project. It doesn't take much of an imagination to realize the problems these mega projects create. Suffice it to say once this land is bulldozed short of human annilation it will never return to a natural state. Nestled between two National Forest its a huge mistake to terraform such huge swaths of land.

It's time we get out of this post WW2 mentality of endless suburban sprawl and long commutes. That paradigm is not working. We need to start rethinking of how we see our inner cities. Reinvestment in our existing communites and zoning laws to allow for denser more walkable communities is a good start.. Instead of this inless quest to pave over everything that is natural and spend hours polluting our planet getting from far off point A to far off point B, let us reinvest in communities such as South Los Angeles. Is the stigma of building in South L.A. far greater then the stigma of buildng over a natural habitat? What's wrong with us?

And to the comment that "hardly anybody uses this land" Building over land is not the only way to get "use" out of it. How many hours does an inner city youth have to be driven to go camping these days? Two, three, four hours? When is enough, enough when it comes to this wasteful mode of constructing our world.

Personally I hope this mega project goes bankrupt and the investors decide to reinvest in something smarter.

[Grand]

You posters just won't give up........... I have lived in So.Ca. for 25 years and enjoyed it when it was good. What has happened with the conjestion and the ugly track housing.....it's pathetic.
No one has mentioned the loss of jobs, You think you can have self substaining communities? Come on, wake up! Those days are gone.
Obviously I no longer live in So.Ca. and happy for it.
What you knew is no longer and it "ain't gonna get any better".
For those who think it's going to get better...........DREAM ON!!!

[Jack]

Not exactly breaking news here. The Wall Street Journal reported this in a big story in their May 1 edition, eight days before the LABJ. As Desmo notes, CalPers has a big investment in the Newhall venture. Per the WSJ, $970 million.

[Cal]

It is no wonder so many top guys at CALPERS are leaving, they have lost so much money it is embarassing. I hope it is merely incompetence instead of something more. I wonder about the due diligence done during the process, it was incredibly poor and clearly they only modeled for things not getting very bad.

You can't always plan for times to be good, you are planning to fail if you do so. Yet so many people do exactly that, they make long term plans expecting things to get no worse than at the time they make their plans.

[Cal]

OT: CNN/Money article is a good read.

http://money.cnn.com/2008/05/01/real_estate/
Regnier_Postcards_from_the_Edge.moneymag
/index.htm?section=money_latest

Mainly centered on the LA/OC area. I thought the 2 following quotes were interesting:

"Keith Myers, who runs a large ReMax agency in the San Fernando Valley, says that a third of his sales now fall apart after going into escrow."

"Erik van Joosten, market manager for Redfin, observes that around 25% of listings in Orange County are would-be short sales - that is, the owner hopes to convince the bank to take a price less than the value of the loan as an alternative to foreclosure. But short sales make up just 5% of sales pending, which suggests that banks aren't approving a lot of offers."

It will be very interesting to see if the surge of pending activity turns into sales. April will have a very favorable YoY comparison to compare to so I would have done everything possible to cram as many closings into April as possible.

The money quote for me was :
"This is what economists mean when they say home prices are "sticky"- people just stop selling as prices drop, which slows the rate of decline. Of course, the downside to sticky is, well, you're stuck."

Stuck, indeed. And it appears ever more so with each passing day.

[peter m]

" We need to start rethinking of how we see our inner cities. Reinvestment in our existing communites and zoning laws to allow for denser more walkable communities is a good start.. Instead of this inless quest to pave over everything that is natural and spend hours polluting our planet getting from far off point A to far off point B, let us reinvest in communities such as South Los Angeles. Is the stigma of building in South L.A. far greater then the stigma of buildng over a natural habitat? What's wrong with us?"

There is a bit of a problem with reinvesting and remaking of S Central and much of the inner older decrepit districts around, surrounding and saturartng LA dwtn and South LA county. Companies and good to hi-income affluent middle class folks with families don't want to settle in these areas. I can name about 20 or so communities and cities in South LA county which really need serious rejuvination :they makeup almost 1/2 of LA city area are are mainly south and east of dwtn.

Heres a quick simple question: how many folks on this blog who are looking for affordable shf's are willing to locate in Compton? Seriously! Not a joke question at all. Compton is close to dwtn and westside, is affordable, half hr to the beach, has access to public tranport, has a large industrial parks infrastructure in place, has retail malls, ect.

Sure, Compton has hi crime rates, gangs, and a poorly performing public school system, but so does much of LA county. Talking about revitalizing areas in inner LA county and city is much easier said than done.

[tew]

Their debt alone is $74,000 per planned house. If the LT"V" on this project is 80% (is that typical for land buys like this?) then they've paid $93,000 per planned house just for the land.

Does anyone know the full construction costs, including improvements, permits, and all the other stuff needed to create sales-ready houses?

[Geek Seek]

mbob: where does the money take us today?

[Mark]

Peter M ..... "Compton has hi crime rates, gangs, and a poorly performing public school system,"

Sounds like two grand reasons not to move there.

[Rich]

I can't think of too many areas of the country where the people would sit back and let politicians approve that kind of massive sprawl. If Californians are all sold on natural foods and excercise, how does respect for nature and community remain so seriously out of whack? Or are you guys simply hypocrites who smile when the camera is running?