Hat tip to Susie for sending this along, from the latimes.com:
Scattered across 540 acres of San Diego County hills and ravines, the 235 opulent homes of the Bridges at Rancho Santa Fe flank a private golf course and country club with tile-roofed towers inspired by Tuscan villages.
The placid panorama belies decades of bruising battles among the project’s developers. The cast includes home-building titan Lennar Corp., a bankrupt La Jolla deal maker and, in an improbable late entry, con man-turned-preacher Barry Minkow.
The dispute ultimately led to a federal criminal conviction against Minkow and a continuing investigation by the Justice Department. But it all began here, at a classic Southern California home development that promised riches for its partners but ended up exacting a high price on the key players.
The court filings offer a rare glimpse into the inner workings of a high-end real estate deal gone bad.
Lennar, the venture’s main financier and manager, says it lost $50 million on the Bridges in spite of the custom-built mansions and expensive tract homes gracing its hillsides. Sales soared during the housing boom, but by 2009 the company was moving only one home every two months, San Diego real estate consultant Russell Valone said.
“Lennar did not go into this project thinking they were going to sell half a unit a month,” said Valone, the president of MarketPointe Realty Advisors. “There’s no way they planned on being there that long — they’re a public company and they want to get that money back and put it to work.”
At the center of the wrangling is Lennar’s partner at the Bridges: Nicolas Marsch III, 64, of La Jolla. A native of Chicago, where his family was in the construction business, Marsch took the helm of the enterprise in the 1970s and set out to make his fortune as a developer in California and Colorado.
Marsch ultimately set his sights on Rancho Santa Fe, 25 miles north of downtown San Diego. Described by CBS sportscaster and former resident Dick Enberg as “Beverly Hills in the country,” the very private suburb caught the world’s attention in 1997 when 39 cultists at a rented mansion poisoned themselves in expectation of ascending to a spaceship.
Marsch had purchased much of the Rancho Santa Fe land by the early 1980s. He launched the project he then called Horizon Country Club in 1985, in a partnership with a wealthy Northern California developer, Ronald Williams.
Click here for full story:
http://www.latimes.com/business/realestate/la-fi-marsch-20110624,0,1171722,full.story
Yep, its quite ugly behind the scenes out there. I believe that most of Lennar’s actual “losses” stem from the golf club, not the residential. They sold all the lots at a nice amount. They just didn’t hit their projections as fast as anticipated on the semi-custom homes.
Golf memberships/operations is where the huge sink hole is!! Massive amount of $$$ flushed down the drain every year due to the apx 50% of membership sitting on Lennar’s books (and having to likely fund the huge monthly dues of that 50%+).
Still an insanely great community for the right person.
I agree that it must be the golf club that is losing so much money. The homes/lots are 95% sold out and most of them sold prior to the housing bust.
I believe that the club ultimately would like about 400 members. Maybe this neighborhood of roughly 235 homes is too small for the club.
Anyone know if Del Mar country club went bankrupt because the neighborhood was too small?
FutureRSF – Del Mar CC is privately owned and was bought back during at a foreclosure auction decades ago by deep deep deep pockets. They got all the lots and club/course for a song.
Thus, while not pouring cash into the club, they still control it. Now the widow of the original owners/billionaire is remarried to a second billionaire.
Plus better location so more demand from 3rd party members.
Yes, Del Mar CC is in a superior location. I imagine that Del Mar CC attracts more non-resident members than the Bridges.
Any thoughts about what the creditors may do with the two lots (8, 9) that Marsch owned? Will these be sold at auction?
Doubtful. I don’t think the creditors are traditional 1st TD lenders required to auction the properties.
My guess is that they will sit for a bit then get listed at an astronomical price given that they are the best lots (out of only a few) available in the custom section. Depends how badly they want the cash.
My guess would be $2.5mm+ each
Clearfund, you are one step ahead of me. I was thinking about trying to get one of those lots for a reduced price. I am not sure I can justify $2 mil for a lot given the price of current resales in the Bridges.
Hopefully, the golf club will find a path to financial viability. Otherwise, the neighborhood will be much less desirable with a struggling club.
BTW, anyone notice the Bret Boone house for sale for $14 mil. That’s more than double the price of any other home. Kinda of reminds me when Steve Finley listed his Del Mar beachfront home for $21 mil, but ultimately sold for $7 mil.
Future – When there are only 3 or so lots left of any premium, then really what is the price?
Sure, a spec home wouldn’t be built as it wouldn’t make sense, however, an end user who wants that panoramic clubhouse view?
Build 6ksf x 400/sf = $2.4mm+$2.5mm dirt=$5mm home…why not if you love it and have the cash.
Someone may roll in and buy up both, combine them for $4mm and have a one of a kind lot/yard experience in that neighborhood…what’s that worth when the market comes around down the road?
We did a home in there in 2002 on just under an acre (no view) but knew it would stand out for its large backyard which was a rare commodity in there.