In one of the biggest land sales in the history of pricey Balboa Peninsula, Southern Pacific Land Co. is offering more than 100 residential lots valued at an estimated $150,000 each for the discounted price of $103,000 to $116,000.
But hold onto your checkbook because there's a catch. If you don't already own the home that's built on one of the 126 lots up for sale, you won't be able to buy the land under it.
The San Francisco-based subsidiary of Santa Fe Southern Pacific Corp. bought the property, which stretches north in a straight line from the Balboa Pavilion, in 1911, and duplexes and triplexes eventually were built on most of the lots, company spokeswoman Susan P. Saltzer said.
But while the homes were sold, mostly to investors, Southern Pacific retained title and offered home buyers 50-year-leases that did not include a provision for eventual purchase.
This summer heralds the 25th anniversary of most of those leases and, under their terms, they may be adjusted to reflect fair market value.
Most of the current leases are for between $100 and $300 a month--and readjustment could quadruple that price, said Randy Johnson, president of Independence Mortgage Co., which is managing the sale of the property for Southern Pacific.
So for the first time in the history of the leases, Southern Pacific is offering to sell the lots to the owners of the residences built upon the land.
"We are primarily in industrial development, and this residential property does not fit our portfolio," Saltzer said. "While we are not desperate to sell, we will seek other purchasers" if the homeowners turn down the offer.
Those other buyers will be held to the specifications of the original leases, which provide for readjustment of the lease-price every five years after the first 25-year adjustment, Saltzer said.
The 126 lots are located between 33rd and 54th streets on Seashore Drive and between 10th and 18th streets on Balboa Boulevard. None of them are waterfront properties, but many are only one house away from the beach, Johnson said.
Between 30 and 40 of the lots are owner-occupied on a year-round basis, Johnson said, and the rest are investment properties.
"We are not requiring that the (building) owners buy this land, but we're offering it first to the lessees at a discount price, and we're offering a variety of financing plans through Independence Mortgage," Saltzer said.
Those leasing the property will receive a letter from Johnson outlining the offer. Buyers can arrange their own financing, but if they are interested they must contact Southern Pacific through Johnson by June 15, Saltzer said. Escrow must close on the property by Sept. 15.
"And everything is processed on a first-come, first-served basis," Saltzer added.