NEWPORT BEACH — In a deal that could be worth as much as $100 million, an arm of Ford Motor Co. has negotiated an option to buy a choice 100-acre Newport Beach site from the Irvine Co.
The deal is contingent on whether the property, site of the Loral Aeronutronics plant, can be zoned for luxury homes. An announcement is expected today or Monday.
The land transaction would be one of several in recent weeks that point to renewed interest in Southern California's recession-battered real estate.
"This deal has been in the works for a long time, I'm sure," said Irvine marketing consultant Ken Agid, "but it still is a good sign for the economy."
It will be two or three years before anyone is ready to break ground, so the deal shows faith that the recession will end, he said.
Ford Motor Land and Development Co. holds the master lease on the site, which once housed a Ford Aerospace facility. The company has been negotiating with Irvine Co. officials for several years about purchasing it.
Sources close to the negotiations said Thursday that Ford and the Irvine Co. have worked up a purchase-option agreement under which Ford would propose a plan for the property but would not be obligated to buy the land if Newport Beach city officials balk at the proposal.
The final sale price would depend on a variety of factors, including the zoning and the number of homes the city will allow, said George Spraggins, district manager of Grubb & Ellis Commercial Real Estate Services in Newport Beach.
If developed as Ford wants, "the land is worth $100 million minus cleanup costs," said Robert McFarland, a senior vice president with Market Profiles, a real estate research firm in Newport Beach. He based his estimate on the assumption that Ford could obtain zoning for five lots to the acre and that the homes to be built there would sell for an average of $800,000--of which $200,000 would represent the cost of the lot.
Consultant Thomas Wilck, whose firm has been helping Ford in the preliminary stages of its talks with the city of Newport Beach, would not comment on the status of negotiations between Ford and the Irvine Co. but said a proposal already has been filed in Newport Beach. It outlines development of about 500 luxury single-family homes, he said.
Residents of the adjacent luxury community of Belcourt, where many of the homes built by the J.M. Peters Co. in the early 1980s now sell for $1 million or more, have been assured that Ford wants to build a similar community, sources said.
Ford leased the land from the Irvine Co. more than 20 years ago as a site for its Aeronutronics Division. It sold part of that aerospace operation to Loral in 1990 and the rest in 1992, then issued a sublease to Loral. In 1991, Loral announced that it would move from the Newport Beach facility before 1998, when Ford's lease expires.
At its peak as headquarters for Ford Aerospace Division, the Newport Beach site employed more than 4,500 people. Current employment at the Loral plant is about 2,000.
Times correspondent Debora Vrana contributed to this report.