At one point, eight investment groups expressed interest in doing a deal for the ranch. But it’s down to two: Eagle Energy LLC, a Korean group, will buy the ranch outright for $25 million; Highlands Resorts LLC wants to partner with the ranch and gradually convert it to a timeshare. It does not want to purchase or take over the ranch.
Both entities wanted to bargain exclusively, according to Jim Stilwell, general manager of the ranch, and they were the only two to put down $3000 to cover the board’s consulting costs. The board decided that Highlands had the potential both to satisfy those who want to sell their interest and to give continued rights to those who want to stay. It would also put in cash for property improvements. “If the Eagle group were successful, it would effectively close out all other options,” says Stilwell.
However, Eagle is offering less than Pala was earlier willing to pay, say those who want to oust the board. Also, they say, it is seldom a good idea to negotiate with only one party: you can’t play one against the other.
Under Warner Ranch rules, it will take two-thirds of the owners to agree on a deal. But, says Stilwell, some strategies may not require a membership vote. If, for example, Highlands simply wants to buy out some of the owners, no vote would be needed. However, ownership units that were purchased for $30,000 are now being sold for $3500. The Pala or Eagle buyouts would bring much more money to those who want to sell. They say the Highlands deal is a decidedly lowball one. “In my opinion, the board owes the ownership an answer to the question of how Highlands jumped to the front of the line,” says Maizlish.
The battle is likely to rage for some time. “There are factions,” says Stilwell. “Some want to sell the ranch, others want to preserve the ranch.” But neither side “wants to see the ranch destroyed. Nobody wants to see a developer come in here and build 3000 homes and make it a subdivision of San Diego.”