Donald Bren Biography
A Billionaire’s Story
Net Worth: $16.4 Billion
Wealth Origin: Real Estate
Place of Birth: Los Angeles, California
Education: Bachelor of Arts/Science, University of Washington
Military Service: Marines, 3 years
A History of the Land
If you were to ask Donald Bren what lead to him owning one of the most valuable real estate empires on Earth, he’d tell you three words: “Location! Location! Location!” In truth, this is a story that began long before Bren or really any American walked the, what are now considered, world-class beaches of Orange County. To be clear as to the “Location” we’re talking about, Bren and his Irvine Company are most notably credited for developing the cities of Irvine, Newport Beach, and Mission Viejo.
Native Peoples Meet the Spanish
It is helpful to understand just how many characters, business deals, and events dot this lands storied history, all, in the end, to be connected and sketched into Donald Bren’s vision of the perfect planned community. Human activity in the area can be traced back nearly 10,000 years; in 1933, along the cliffs in nearby Laguna Beach, a young man chiseled out the skull of who became known as “Laguna Woman.” For some time she was considered the first woman in the Western Hemisphere, only until earlier remains were found elsewhere. Proving no matter the time period, people know a good beach when they see one.
Fast-forward to about 2,000 years ago, the region was inhabited by a native tribe known as the Gabrieleno. When Spanish explorer Gaspar de Portola arrived in 1769, he brought with him: cattle, forts, missions, and diseases; many of the native peoples, unfortunately, died off due to a sensitivity to these germs and those who didn’t die (or run while they could) worked as enslaved laborers at the missions.
The Irvine Family
In 1821, Mexico gained its independence from Spain, along with control of the lands. The Mexican government split the area into three ranches: Rancho Santiago de Santa Ana, Rancho San Joaquin, and Rancho Lomas de Santiago.
Come 1864, Jose Andres Sepulveda sells his 50,000 acres of Rancho San Joaquin to Flint, Bixby & Company; a silent partner in the deal was none other than James Irvine, an Irish immigrant who moved out west to make money off the California Gold Rush.
The company would later acquire the 47,000 acres of Rancho Lomas de Santiago for $7,000.
Following the Mexican-American war, the land of Rancho Santiago de Santa Ana was divided among four claimants as part of a lawsuit, one of these claimants being James Irvine. By 1878, Irvine had bought out his partners’ interests for $150,000, making him the sole owner of 110,000 acres of land that stretched 23 miles from the Pacific Ocean to the Santa Ana River.
Upon James Irvine’s death in 1886, trustees were to be in control of the land until his son, James Irvine II, turned 25 years old. However, the trustees tried to sell the land illegally, therefore Irvine II took over control earlier than planned and began fielding olive and citrus crops. He would go on to incorporate the land holdings as The Irvine Company in 1894, all the while, continuing to purchase adjacent parcels to in order to grow the ranch’s size. Focusing on agriculture and cattle, the area would largely remain the rural farming space passersby would gaze at while riding the train between the bustling metropolises of Los Angeles and San Diego.
Enter, Donald Bren
In a Los Angeles Times article, Donald Bren (Born: May 11, 1932) describes one of his fondest childhood memories; during the early 1940’s he’d tag along with his best friends family to explore Lido Isle and spend countless hours rowing around Newport Harbor. They would come from nearby Los Angeles where Donald’s father of Jewish descent, Milton Bren, had made a name for himself as a Hollywood film producer and real estate investor. His mother, Marion Newbert, came from old money as her Irish immigrant grandfather founded a very successful company which manufactured railway wheels in Baltimore.
Despite their wealth, his parents did not want their children to grow up spoiled-rotten so they had them attend the local public school, Beverly Hills High. During summer break while most classmates were enjoying time off, Donald and his brother were expected to work, their father would bring them along to his rental properties to help fix the places up.
A Young Man Finding His Way
In 1948 Milton and Marion divorced, later that year Milton would remarry to Academy-Award-winning actress Claire Trevor. Donald distinctly recalls Trevor’s early influence on his life as she had many relationships with artists of the day, whom she’d introduce Donald too, he says “That was such an exciting period…What I learned from Claire was to see a different dimension – the depth, the symmetry, the relationship, the color. That carried over to architecture for me.”
Donald’s brother describes him as a perfectionist, saying “In high school we would take old cars and turn them into street hot rods. I’d build one, and it would run, but there would be a couple of screws left over. Not Donald. He would spend hours in the garage going over every detail. Everything had to be perfect. He starts at A and ends up at Z. He goes right down the alphabet.”
High school graduation came around in the summer of 1950, he would leave Beverly Hills High to attend the University of Washington, where he earned a bachelor’s degree in business in 1956; he funded his education with scholarships and his own money. While in college he made a name for himself as a skiing champion, even applied to the 1956 U.S. Olympic skiing team, however, got injured and ultimately could not participate.
After earning his degree, Bren enlisted in the Marines as an infantry officer, looking back he says the discipline “was a rude awakening after college life.” He would spend three years serving his country and still regularly attends the Marine’s birthday celebration in Orange County.
Building His First Home
Upon returning home from the Marines, Bren found himself once again in Newport Beach pondering a return to school for a law degree. When frolicking about the same Lido Isle he’d frequent as a child, Bren noticed a waterfront lot for sale; he understood the potential of this land, borrowed $10,000 from a friend at a bank, and began building a home on the property.
Developing Mission Viejo
The Bren Company was then launched where they’d subscribe to a business cycle of buying lots, building homes, selling the homes, and reinvesting profits into new developments. This model proved highly successful and by the early 1960’s, Bren was designing suburban master-planned communities as large as the 10,000-acre city development of Mission Viejo.
Come 1970, Bren sold his company to International Paper for $34 million, however, after property values plummeted in California a couple of years later, he chose to buy the company back for $22 million.
Purchasing the Irvine Company
In 1977 the Irvine Ranch was put up for sale following a hike in taxes in California. Determined to do whatever it’d take to realize this great opportunity, Bren fought off larger competing corporations such as Mobil Corp. He also, due to a lack of sufficient funds, was forced to partner with A. Alfred Taubman in a deal where Taubman provided 40% of the down payment for a $337.4 million bank loan, and ultimately, Bren was able to personally secure a 35% stake in the Irvine Company.
Taubman, in an effort to begin seeing a return on the investment, began selling off his shares of the company to notable businessman among the likes of Henry Ford II, Milton Petrie, Max Fisher, and more.
On one hand, in order to achieve complete ownership of the ranch, Bren would now have to work out all kinds of deals with all kinds of people in all kinds of places throughout the country, which likely became tiresome and frustrating.
On the other hand, it made the big picture more attainable; now, rather than negotiating ownership with somebody entirely personally and financially invested in the company, he was working with people whose net worth’s were so unrelated to their small stake in the Irvine Company that it probably made it a lot easier for them to sell it to Bren, particularly for a profit.
Bren began the process of buying out each partner one by one.
“Pushing Out” the Irvine Family
According to an article by the New York Times, by 1983 Bren, the great-granddaughter of James Irvine, Joan Irvine Smith, and her mother Athalie Clarke controlled over 90 percent of the company; with Bren owning the vast majority.
I must add that “pushing out” is not the best way to describe Bren buying out some of the final shares of the Irvine Company from Smith and Clarke. As a matter of fact, they agreed to sell their shares upon Bren’s initial offer of $115 million for their 11% stake. This would value their shares as $200,000 apiece, a price Bren had paid for shares previously. However, the heiresses believed the shares could be worth more, possibly up to $600,000 apiece for a total of $363 million.
In order to determine exactly how much their shares were actually worth, the women had the Irvine Company file a lawsuit against them in order to gain an honest value of their holdings through the court. As I said, although the case did drag on, it seems there wasn’t much real animosity between Bren and the ladies. By the end of it, Smith says to the Los Angeles Times “Donald was very nice…This dispute has always been strictly about money.”
Finally, the case came to a rapid close in 1991 after Smith had already spent over $30 million in legal fees. The primary reason it didn’t drag on longer is Smith believed an economic downturn was imminent; meaning the shares could lose value if the economy tanked and the sooner she’d settle the more they’d be worth. The Irvine Company was even in the midst of a sales slump to add more urgency.
Having long ago arranged the funds for Smith and Clarke’s buyout, Bren jumped at the opportunity to quickly settle. The court determined the 11% was worth $150.5 million and tacked on $105 million at an interest rate of 9.22% for a grand total of $256 million. On June 18th, 1991, the Irvine Company wired $127,934,845.01 into each of their bank accounts (Both owning half of the 11%) and the dust settled.
Spirits were high as Bren offered advice to the women, reminding them not to spend all that money in one place. Smith then invited Bren to share a bottle of champagne at one of the horse shows she holds annually in San Juan Capistrano. Bren said he’d love to come, asking if he could bring his daughter and Smith responded saying absolutely, also adding she’ll have Bren present one of the trophies.
Ultimately, if somebody wired over $127.93 million into my bank account for a plot of land my great-grandfather bought over 100 years ago, I’m sure I wouldn’t have much to complain about either. Smith would go on investing a large sum of her money into government securities, such as treasury bills.
After over $600 million in share buyouts, Donald Bren would achieve status as the sole shareholder of the Irvine Company in 1996.
Key Decisions While Running the Irvine Company
Irvine Company Key Decisions Before Donald Bren
Before Donald Bren purchased his 35% stake in the Irvine Company in 1977, one of the most prosperous decisions the group made was “selling” 1,000 acres of land to University of California for $1 to build UC Irvine. A few more highlights that occurred pre-Bren-era include the constructions of East Bluff Village (1964), what’s now known as Fashion Island shopping center (1966), and the Irvine Ranch Water District, a water recycling plant (1967).
Donald Bren’s Key Moments
Working with homeowners.
In the 1950’s the Irvine Company made long-term lease agreements with home buyers in the Newport Beach area. By 1982, those leases were ready for renewal, however, due to inflation and a variety of other factors, the company reasonably planned to hike up the rent. This angered the homeowners, who together created a political action group, called the committee of 4,000, in order to work with Taubman, Bren, and co. to keep rent as low as possible.
Note: At this point in time, 1982, Bren does not own the Irvine Company outright. As a matter of fact, Taubman and his fellow wealthy business friends from the east coast still own more shares combined than Bren. This situation, along with others, would reinforce Bren’s belief that if this development was going to prove successful, there needed to be one single voice calling the shots.
Taubman thumbed his nose to the homeowners, telling them a deals a deal. Bren was furious at the way his east coast partners were handling this and so were the homeowners who tied up the “Eastern carpetbaggers” in lawsuits that stifled development and cost millions.
Amidst the turmoil and a slumping real estate market, Bren finally managed to buy out his now-frustrated partners. He quickly looked to rekindle the company’s relationship with the homeowners by offering them discounts for the property improvements they made and 15-year loans to stretch out their payments while also keeping them as low as possible. The classic Win-Win scenario Bren has become so familiar to.
Obtaining Pelican Hill Resort Permits.
The construction of Pelican Hill Resort and its surrounding golf course was like an installment of the Mission Impossible movie series. 28 years to process with the California coastal commission. The first issue was water running off from the golf course into the ocean. The commission tells the developers, as Donald Bren would put it, to “Devise an engineering plan no one has ever seen before.” Well, they actually did it by building two reservoirs beneath the golf course fairways to capture the water, recycle it, and pump it back onto the golf course; a project that cost them $10-$12 million.
After completing this feat, they return to the coastal commission to get their construction permits. Now there was another issue, already 25 years into the process, the commission says the water run-off from the resort has no solution and they must find one. Adding it would contaminate the warm-blooded sea animals mating area that lies just a quarter-mile off-shore.
Bren now enlisted the help of University professors and after two years of studying, they found the run-off contaminating the oceans would not be from the golf course or resort, it was water run-off from the state-owned highway (Due to oil, trash, etc. along its pavement.)
After 28 years of engineering and research the coastal commission finally and reluctantly gave the Irvine Company the necessary permits to construct Pelican Hill Resort. The kicker to him was that to this day, the state-owned highway hasn’t been upgraded at all from the state it was in when he was making pigs fly to obtain his permits.
1979 – Crystal Cove State Park, 2,791 acres of land along three and a half miles of precious California coast.
1996 – Contributes 21,000 acres to the Nature Reserve of Orange County. Creating the amount of space required for indigenous species to survive in a wholesome ecosystem.
2001 – Designates 11,000 acres of land for permanent protection in partnership with The Nature Conservancy.
2010 – Designates 20,000 acres to the County of Orange.
2014 – Irvine Company announces a major land gift of 2,500 acres near Anaheim Hills, East Orange, and Irvine Lake.
In total, the Irvine Company has contributed over 57,000 acres of land to be permanently reserved, representing more than 60% of the original 93,000-acre Irvine Ranch. In 2006, over 40,000 acres of the Irvine Ranch were designated a National Natural Landmark by the US Department of the Interior. Two years later, the lands were named a California Natural Landmark – the first such designation – marking the beginning of a new program in the state.
Donald Bren, the Artist
In the same way an artist like Bruce Springsteen needs a guitar to grace us with the burning soul and fury of rock n’ roll bursting from his insides, the Irvine Company is Donald Bren’s instrument, with which he brings to life his own vision of the world, a world that well over half a million people live within today.