Is TIC feeling any pain?

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garfangle_IHB

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Can anyone guess if TIC is feeling any pain from not being able to sell/develop its future communities or has it banked enough cash during the bubble that it can ride out the crash for several years without having to make any money.
 
TIC is a privately held company wholly owned by by Don Bren, his personal fortune is estimated at $13 billion USD. I doubt he's short on cash.





Can he afford to simply halt sales and lay off staff for x number of years? Yes. Will he do so? Only Mr. Bren knows. IMO if the farms are generating a profit, what's the hurry in paving them over?
 
Mmmm... Lets see. Bren and his investment group bought the land for less than $3500 an acre in the late 70s. In the early 80s, Bren had enough profit to take a 92% control of the company. Bren has paid off Joan Irvine Smith more than once. He took sole control of the company in 1996. Eh, who says you can't time the bottom? Looks like the smart, and big money of OC, knew how. The company owns the majority of apartment units, commercial space, retail space, and open land (i.e. golf courses, like Pelican Hill) in Irvine and Newport Coast area. The rents alone are probably at a cash flow to carry the company into the positive. Not to mention the assets.





Delaying projects is nothing new for TIC. In the 90s, Newport Coast was delayed for over a year, and it was a hit when it was released at the hefty $400k range. And, they were the very last company to lay people off in the 90s.





I think, you would have a better chance at winning the lottery, than TIC "hurting".
 
About the only thing I can think of where TIC might be hurting was their aggressive pursuit of a greater commercial real estate empire. In the last year or two they bought out someone's (<em>who was it?</em>) CRE holdings. Depending on how it was financed, it may have overextended itself, but probably not.
 
TIC is a very diversified organization, while heavily RE dependent, they cater to all things real estate, from hotels, golf courses, commercial, apt rentals, etc. I remember having a meeting there when they had to cut-off and switch over from the Four Seasons Newport Beach to the Irvine Co's corporate systems overnight and that they have/had a number of challenges back them to get systems up and running (reservations, new contracts, suppliers, etc) that this hotel was just one diversification strategy for them. I guess it's no longer Four Seasons but "The Island Resort".



Point being that there's plenty of cash coming in from other divisions to offset any slowdowns in residential real estate. They probably like the slowdown to revisit planning areas, reassess their strategy and decide when and how to move forward.
 
<p class="MsoNormal">Wow, that’s interesting I didn’t know TIC owned the Island Hotel. Had lunch there this past week and really enjoyed it. The service was great and the hotel seems very well run. Didn’t inquire about the room rates but if affordable I would consider staying there. </p>
 
eva, you might be thinking of maguire. TIC bought some of EOP's socal holdings (mostly SD though) after the blackstone buyout. interestingly enough, though they seemed like the perfect candidate to take most of EOP's OC assets but they wisely stayed away. those assets were heavily reliant on mortgage-related tenants, such as the ameriquest bldgs at the block.





instead maguire properties destroyed their balance sheet and loaded up on debt in order to bid 2B for those assets despite already holding a portfolio with far too many mortgage tenants of their own (new century, option one just for starters.)
 
I'm curious if TIC becomes total tightwads about controlling their land values if the builders currently struggling to make ends meet will come running back to them the next time the market starts to go up. I'm guessing they would, but they'd probably be foolish to.
 
Yeah, "becomes" certainly wasn't the right word there. Just wondering how long the memories will be for these builders if they even make it through this downturn. Since greed is the motivating factor, I'm guessing quite short.
 
<p>In researching TIC, i'm guess they have HUGE reserves of cash.... For when the time is right. In having lived throught the 70/80/90's I get the feeling they have a good idea of what properties are available and what their purposed cash flow might be. To my eyes, they will probably wait a buyer out and get a "good" deal with just enough equity in the deal to make it positive... not great. Maybe 4-8% cap rate starting. It just all depends though. </p>

<p>My guess, they are ok, and sitting on mountains of liquidity and just trying to find an appropriate time to swoop in for the kill.. </p>

<p>-bix</p>
 
stand pat and wait it out is what i've heard although TIC is notoriously secretive. but the strategy is somewhat apparent by what their doing with some of the new planning areas as well as orchard hills. the two new office towers they developed by irvine spectrum are having a hard time finding tenants. they will likely just let them stay empty instead of locking tenants in at rents they feel are too generous. looks like they can and will do that.
 
Rather than start a new thread lets revive this old one.



Had lunch yesterday at the Spectrum. Looks like the new shops in front of the Edwards are

open. The Tommy Bahama. PinkBerry and the new Japanese place.



But in talking to a few people in the shops and doing a little research.

Looks like the Spectrum may be in the same world as Las Vegas. Its finally

hitting a wall because of the recession or whatever you call todays business slowdown.

Many of the working folk in the stores mentioned business was slowing significantly.



Fox Sports Grill. Closing soon ? Was supposed to move to the Triangle in Anaheim.

Thats now on hold. Late 2009 ?



The new Wine spot. Rustic Vine. The signs were up and it was on the TIC website

last I looked. No more. Looks like the Rustic Vine has pulled out of the agreement.

Not sure if the developer MOR Project has the "financial deep pockets" to develop

so many restaurants in OC so quickly. They have 3 in the works.



The area that was the Saleen Dealer is still empty. As well as the Sharper Image

unit. Both have been vacant for all of 2008 now.



TIC has made the Spectrum some of the most expensive Commercial RE in So Cal.

But it may be forced to let some of the space sit empty or lower the rents.

If it wants to maintain the high occupancy its enjoyed in the past.
 
A few weeks ago a (very reliable) friend was talking to another friend who works for TIC and is high up enough to get a gander at budgets and long range plans. He said that TIC was laying off across many (maybe all?) divisions and did not see a turnaround in housing until 2011 or 2012.



And for those of you that care, no, none of these conversations included BkShopr. He's not my source.
 
[quote author="bltserv" date=1214870618]

Had lunch yesterday at the Spectrum. Looks like the new shops in front of the Edwards are

open. The Tommy Bahama. PinkBerry and the new Japanese place.

quote]



I had lunch at the Spectrum on Sat. and commented on the sushi place you mentioned under the "Sushi in Irvine" thread.

That place was dead.

Javiers, Cheesecake, Pinkberry and Nordstroms were busy.
 
The Irvine Company doesn't (seem to) care about returns on investment, etc. They're interested in cash flow. If they want to, they'll underprice everyone in the market to fill a space - this is in CRE, btw. They can also afford to let spaces sit vacant if they think there will be better opportunities in the near future, though we don't see that much in their commercial properties.



It's doubtful they'll have a difficult time unless things get REALLY bad...I mean depression bad. They have a pretty low cost basis across their entire portfolio and are quite diversified.
 
With respect to Maki Maki, TIC tried to kick them pretty hard. Unfortunately for TIC, <a href="http://www.courtinfo.ca.gov/opinions/nonpub/G038039.DOC">the courts kicked them instead</a>. (Although legal opinions can be boring, this one is a pretty good read.)
 
Was at the Marketplace on Saturday, for a trip to Toys R Us. Now that the Linen's and Things has gone BK and is closing, it appears that entire wing of the Marketplace is going to be totally vacant between the Best Buy and Toys R Us. Looked bad, real bad.



On the other hand, was at the District on Friday afternoon to catch Wall-E before the weekend rush, and it was very active --- even at 2pm on Friday afternoon. Honestly, I'm quite surprised at how well the District seems to be doing...I kind of expected TIC to pool its Spectrum/Mktplace power and crush those outsiders who dared to step in so close to the Irvine Ranch. But it would appear the District is having some success, at least against the Marketplace.
 
Branding is important. It is to the best interest for the company to keep the existing customers who bought the brands to know that the products that they currently own is not a depreciating asset. Women have used this excuse for buying Cartier jewelry for years. This is the strategy for Cartier, LV, Hermes, and Tiffany. These companies would shred and destroy their products than to minimize their losses by having sale in keeping up its top brand image. One sale can ruined a company image that took a hundred years to build.



Another example is high class call girl that started her career in the New York penthouse but during the tough time resorted to the street alley tricks and she will never recover to her her glorious days. VOC is another example and I do not say much more.



TIC's strategy is no different and aligns with the branding strategy. Buyers will get desperate eventually. I do not expect to see dramatic price decrease by 2011-2012 for TIC products. For those who will be seeking $250/sf or even $350/sf you will be extremely disappointed for having waited to get a bargain in OH or LCX.



Just like all of you I am guessing but I have the knowledge of previous decade of pricing strategies and data to draw from. Just like many other companies of good brands preservation of image during the tough time is more prudent than minimizing the losses and destroying the confidence their loyal patrons.



TIC should really thank me for polishing its brand.



Hope this will make sense for you. "The virtue of patience=gold" =Confucius= Awgee
 
[quote author="CK" date=1214874458]Was at the Marketplace on Saturday, for a trip to Toys R Us. Now that the Linen's and Things has gone BK and is closing, it appears that entire wing of the Marketplace is going to be totally vacant between the Best Buy and Toys R Us. Looked bad, real bad.



On the other hand, was at the District on Friday afternoon to catch Wall-E before the weekend rush, and it was very active --- even at 2pm on Friday afternoon. Honestly, I'm quite surprised at how well the District seems to be doing...I kind of expected TIC to pool its Spectrum/Mktplace power and crush those outsiders who dared to step in so close to the Irvine Ranch. But it would appear the District is having some success, at least against the Marketplace.</blockquote>




I like the restaurants in the District better than the Marketplace, but don?t care for their shops.



IMO, the Spectrum has a very nice mix of restaurants and shops
 
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