Five years ago, developer Barry G. Hon quit as chairman of Tustin-based Eldorado Bank and decided to try to build a bigger pile of gold in real estate.
Hon has found riches. He also found fulfillment, frustration and foes as his Hon Development Corp. in Laguna Hills took on increasingly larger and more complex projects from Foothill Ranch in southern Orange County to the controversial plans for a resort hotel and residential community in Rancho Palos Verdes.
Now, Hon is attempting the biggest gamble of his career. He must come up with more than $200 million in cash as a down payment for his $967-million purchase of Landmark Land Co.'s vast real estate holdings, including some of the nation's choicest golf course properties.
Some are skeptical that Hon can pull off the deal. Investors who are betting on Landmark's stock to fall contend that the deal is suspect, aimed more at appeasing federal regulators who are poring over questionable real estate deals made by Landmark and its primary subsidiary, Oak Tree Savings Bank in New Orleans.
The properties Hon is buying are funded, owned and managed by Oak Tree and its subsidiaries. Landmark had to sell the properties to satisfy new federal regulations limiting equity real estate investments by thrifts.
While the proposed investment has thrown Hon into the spotlight, it is clearly not a place he relishes. A quiet man publicly, the 51-year-old Arkansas native said the negative side-effect of his growing operation is the publicity it has engendered.
"I hate it," he said.
His public persona is multifaceted. To some, Hon is a fundamentalist Christian who supported presidential candidate Pat Robertson in 1988. He is a "creative" developer, said Gerald G. Barton, Landmark's chairman. And a former Orange County Planning Commission member recalled that Hon and his company were "straight-arrows."
To others, Hon represents a darker side. A Silverado Canyon resident charged that Hon Development wasn't forthright about its Foothill plans and misled the public, if not county supervisors, on a number of issues. And a Rancho Palos Verdes councilman said the developer can "play hardball."
While the public exploration of his endeavors is troubling, it will not stop him from the grand plans he has for the Landmark properties, which he is buying and running separately from Hon Development.
In a two-phase purchase agreement, subject to regulatory approval and his own review of the assets, Hon will pick up 19 golf courses, four hotels and thousands of acres of residential and commercial land, much of it ready for development and sale to builders.
The deal, one of the largest real estate transactions in the country this year, includes such well-known resorts as PGA West, La Quinta Golf & Tennis Resort, Mission Hills Country Club, all near Palm Springs, and Palm Beach Polo & Country Club in West Palm Beach, Fla.
He isn't buying just the properties, though, he's acquiring the operating companies and 3,500 employees who design and operate hotels and resort properties and develop land primarily for residential use, anchoring the home sites, as Hon does, with golf courses.
"It's important to us to buy the operating companies so we have the team with the experience of building a championship project," Hon said. "I wanted not only the golden eggs, but the goose that laid the golden eggs."
Though Landmark's golf course projects are all in the United States, "its name and reputation is worldwide," Hon said. Taking advantage of that reputation, he wants eventually to build or manage golf courses in other countries.
Hon Development previously has used the Landmark golf course team in its Southern California developments.
But his recent deals have engendered some skepticism and criticism.
"As you grow bigger, you become a bigger target," Hon said.
In the Landmark deal, short-sellers--those who invest in the hope that a target company's price will fall--contend that Landmark is a troubled company under investigation by the Securities and Exchange Commission and thrift regulators. The investigators have questioned the accounting on some of Landmark's real estate deals.
The critics believe that the sale to Hon is merely for show, and a delaying tactic. They believe that Hon will be unable to finance it or will have to sell off properties to complete the deal.
But Barton denied Landmark was in any trouble, and Hon said he will come up with the needed money--more than $200 million in total--and will not sell any of the prime golf courses or hotels to do it. The only sales, he said, will be the usual sales of residential and commercial land to builders.
In the 2,750-acre Foothill project, Hon has been praised by some for figuring a way to develop the old Whiting Ranch that other developers, including Barton, had passed on. But he has done it at a cost to the environment, say others.
Hon also has stepped on toes in Rancho Palos Verdes. City Council member Bob Ryan says Hon "seems to have the wherewithal" to "play hardball."
Staff writer Michael Flagg contributed to this story