Commercial Real Estate Encyclopedia

Donald Bren - The Irvine Company

Donald Bren started building homes in Orange County, California. He subsequently joined the O'Neill family to form the Mission Viejo Company to build a master planned community.

With this experience under his belt, Donald Bren then partnered with a member of the Irvine family and other investors to acquire The Irvine Company. He since acquired the remaining shares of the company to become the wealthiest real estate investor, developer, and community builder in the United States.

Donald Bren attributes his remarkable success to location, location, location. Situated between the two major markets of Los Angeles and San Diego, the desirable Southern California climate and coastal region allowed The Irvine Company to realize their vision of a planned community that balances work, life, and play.

Donald Bren - Biography

A Los Angeles native and former marine, Donald Bren started as a new home builder in Orange County, California. Mr. Bren would eventually partner with the O'Neill family in the Mission Viejo Company in 1963. The company had a vision of developing a master planned community on the Rancho Mission Viejo that had been in the O'Neill family since the mid 1800's.

The Master Planned Community of Mission Viejo

The opportunity with the Mission Viejo Company would allow Donald Bren to build his skills of master planning, master building, and creating a community from the ground up. He and his team went to work creating the plan and building the infrastructure that would give birth to the community of Mission Viejo that would come to represent approximately 11 thousand acres of the 52 thousand acre rancho.

Starting a Real Estate Investment Partnership With The Irvine Family

Donald Bren's success establishing a community in Mission Viejo drew the attention of Joan Irvine Smith. Mrs Irvine Smith was a descendant of James Irvine. During the Gold Rush, Mr. Irvine established himself in business and real estate in San Francisco and acquired two ranchos in Southern California that dated back to the area of Spanish and Mexican land grants. These lands would eventually combine their over 93 thousand acres to form the Irvine Ranch.

In 1976, Donald Bren and Joan Irvine Smith partnered with other real estate investors to acquire the Irvine Company. With the acquisition completed in 1977, the company set out to manage, plan, develop and build what would be the largest master planned new private community in the U.S.. Mr Bren would lead the effort.

Location, Location, Location

The vision for the community came from William Pereira, an innovative architect who had a profound influence on the design of Los Angeles commercial properties and Southern California real estate development. His idea was to create an independent community that balanced all types of commercial properties to create an environment that was conducive to live, work, and play.

With the Irvine Ranch situated right between Los Angeles and San Diego and also located between the coast and the mountains, the ranch was the ideal location to realize Pereira's vision. The Mediterranean climate, geography, and proximity to two major markets meant the Irvine Company was uniquely positioned to realize that original vision that has since evolved.

Investing Cash Flow Back Into The Real Estate

Other factors were also important in ensuring the success of this opportunity for Donald Bren. First, the ranch already generated cash flow from its agricultural operations. Irvine Ranch was the largest producer of Valencia oranges in the United States. This meant the company could sustain itself throughout the lengthy process of planning, building infrastructure, and achieving other requirements of building large master planned communities.

Second, there were no financial strains or demands placed on the company to pay interest payments due to land debt. This allowed the company to reinvest its cash flow back into the business, and not compromise the long term process of establishing large communities with short term financial commitments.

Donald Bren also believes it is advantageous for a large scale community developer to be privately held. Similar to the constraints placed on a company's cash flow by interest payments, quarterly requirements to pay dividends reduce a developer's ability to reinvest in and pay for necessary planning and infrastructure costs that lay down the long term foundation of the planned community.

Possibilities of Building Master Planned Communities and The Future

Proud of his success in realizing Pereira's vision in creating a large scale master planned community, Donald Bren recognizes the challenges he would face today that would make duplicating his success more difficult. The first is finding an equivalent location. The second challenge is the overwhelming legal and regulatory process a large scale community development project would face.

Given the challenges Donald Bren identifies for large scale community developments, it is easy to understand why The Irvine Company has expanded beyond Orange County, California and now owns a portfolio of properties in multiple markets. The Irvine Company's real estate portfolio now includes multifamily, retail, office and hospitality properties in key markets throughout California as well as properties in Chicago and New York.


Real Estate Terms

1. How much cash will be required to make your mortgage payments? Debt Service >>

2. Who can you go to to finance your construction or development project? Construction Lender >>

3. What professional can assist you in maximizing the value of your investment property? Asset Manager >>

4. How can we assess future commitment to infrastructure to support our communities and future development? Capital Improvements Projects >>

5. What measurement indicates if a property's financial performance can cover its debt? DSCR >>

6. What part of a city is the center of urban economic development? CBD >>

7. What allows property owners and professionals to estimate the market value of a commercial property? Comparable Property >>

8. What can landords do to entice prospective tenants? Concession >>

9. What critical factor do stores depend on to drive traffic? Anchor Tenant >>

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