Years ago, a reporter asked Emile Haddad, the CEO of Irvine, California–based FivePoint Holdings, if he became a developer because he had seen so much destruction in his hometown of Beirut. “Honestly, I’d never thought about it,” says Haddad. “But I did a lot of thinking and realized that the answer is, ‘Yes.’ But it wasn’t concrete destruction, it was the destruction of community. I saw neighbors become enemies, I saw friends become enemies. Civil wars are ugly. I think wanting to bring that community together is what drove me to want to be in the business of development.”
A civil engineer by training and an entrepreneur at heart, Haddad has spent his career working to improve the built environment. Fresh out of college, he started a business weatherproofing Beirut’s concrete buildings. After coming to the U.S. at age 27, he worked his way up in the housing industry, eventually becoming Lennar’s chief investment officer. Today, with the help of a longstanding team, he manages a development company with $1.8 billion in capital and a market cap around $620 million. Wall Street may not fully appreciate the long-term vision, but community building is not a quick business.
“He’s really taken on a much more global view of housing and community that few others are even contemplating,” says Dan Dunmoyer, president and CEO of the California Building Industry Association (FivePoint is a member of the trade organization). “The typical model is to put roads and sewers and a school or two, and then sell the land to a home builder. In Valencia, he’s creating an entire community with a commercial center and jobs and net-zero-energy homes. We do need more housing, so how do you do it and find a balance between environmental protection and social equity and the whole community component of building homes? He has the mindset and capacity to do that and is really challenging people to think more holistically.”
In April, California Gov. Gavin Newsom tapped Haddad as the sole representative of the home building and development industries on the Business and Jobs Recovery Task Force, a group of prominent leaders charged with making recommendations to aid the state’s economy during the pandemic.
FivePoint Holdings is 11 years old, but the firm was incubated 25 years ago as a land investment program at Lennar, which maintains a 40% stake in the independent company. One of the largest developers in California, FivePoint is building roughly 40,000 homes in the following master-planned communities: Valencia (formerly Newhall Ranch) in Los Angeles County; Great Park in Irvine; and the Shipyard at Hunters Point and Candlestick Park, two adjacent developments in San Francisco. The homes include luxury and market-rate homes that range from 170% to 40% of the median home price for the area, along with government-subsidized affordable housing. Each is designed with a central commercial and retail core, as well as schools, parks, and recreation facilities. At Great Park, which is about half built out, FivePoint built a 175-acre sports center as part of a $250 million infrastructure investment, and separately built a 12,000-seat outdoor amphitheater, leased to Live Nation. It also attracted a major medical provider, The City of Hope, which has purchased one of its office buildings and adjoining land to build a $1 billion cancer treatment center next door.
“The concept of owning land assets and converting them in a way that makes the whole greater than the sum of the parts is a shrewd idea,” says Mike Rossi, former CEO of commercial real estate developer Shorenstein Properties, who is on FivePoint’s board of directors. “Here, you have the opportunity to create an environment that you might only have by good fortune or total happenstance otherwise.”
Haddad is familiar with the joys of living in a tightknit community in a lively urban setting. He grew up in the cosmopolitan neighborhood of Ras Beirut, centered around the American University of Beirut, which would become his alma mater. His parents were executives working for multinational companies, and Haddad recalls an idyllic childhood going to the beach and jumping off rocks into the Mediterranean. Everything changed in 1975, when civil war broke out and tore the country apart. For years, even middle-class families like Haddad’s faced shortages of food, water, and electricity. A brief stint tending to war victims as a volunteer at the local hospital gave him some dramatic perspective on his life.
“Those 80 days [at the hospital] truly allowed me to understand the difference between an inconvenience and a problem,” he says. “We often get confused [when it comes to] business issues and financial issues. Anything you can recover from is an inconvenience in life, and life will be filled with those.”
The Haddad family stuck it out for 11 years, but moved to the U.S. in 1986. Haddad’s uncle had emigrated to the U.S. in the 1960s, and the family had diligently renewed their green cards every year as an insurance policy. Leaving his waterproofing business behind, Haddad and his 19-year-old fiancée, Dina—along with his father, mother, and aunt—came to start a new life in Ventura County. Haddad took a job as a junior engineer while studying for contracting and engineering licenses and doing tenant-improvement projects on the side. For many years, he had a grueling schedule and kept awake during his five-hour daily commutes all over Southern California by snacking on sunflower seeds in the shell.
In 1989, he was working as the head of engineering for Los Angeles–based home builder Marlborough when it was acquired by a large Canadian company, Bramalea. Shortly afterward, the U.S. economy went into a recession. Bramalea went bankrupt in 1995, forcing its California subsidiary to do the same. Haddad and Jeffrey Roos (who now leads Lennar’s home building business in California) decided to keep the company together, selling its one unencumbered property for $3 million while they looked for new investors. Miami-based Lennar, which was looking for a way into the California market, acquired the company.
Within the organization, Haddad began looking at large land development opportunities, specifically former naval bases that had become available for redevelopment, while also helping the company with numerous acquisitions nationwide. Haddad’s group lined up many of California’s largest development deals over the next decade, starting in 1997 with 650 acres on Mare Island, a former naval shipyard in the San Francisco Bay. In 2003, Lennar acquired the 15,000-acre Newhall Ranch; in 2005, it was the winning bidder in an auction for the 3,718-acre former El Toro Marine Corps Air Station in Irvine.
Haddad’s vision for the city of the future is based on the village of the past—what he calls “the urbanization of suburbia.” The future “wasn’t going to look high-tech—it wasn’t going to be ‘Dubai on steroids,’” he says. “It was an evolution in thinking. I started to pay more attention to the things that we were trying to fix, over several years. Environmental movements that were paying attention to environmental justice but inadvertently shutting down development and creating all types of social inequities. Retirees living on a retirement income and having to live away from their children and grandchildren. Segregation of people by income. A lot of hours being lost to commutes. Public education deteriorating. My dad used to say to me, ‘You’re not going to change the world. But if you want to do something good, try to build the world that you dream of.’”
The early projects fit into the suburban model that is typical of master-planned communities: Windemere, a 2,300-acre development in San Ramon dating from 2001, is almost all single-family homes in a bedroom community. The current projects are walkable, bikeable communities that still have a high percentage of single-family homes, but with a higher density of eight to 10 homes per acre (about twice that of traditional suburbia). Unlike other developers of master-planned communities, FivePoint designs the homes and then contracts with builders to build them. This approach helps to ensure a diversity of product and accommodate market shifts in demand, as well as add culturally specific features such as an additional suite for extended family.
This type of development is extremely capital-intensive, typically requires a lengthy entitlement process, and sometimes involves lawsuits. Hunters Point is currently tied up in litigation over alleged faulty remediation of radioactive materials from the site, which was handled by a contractor hired by the Navy. Valencia, on 15,000 acres of pastureland, was held up for 14 years as a result of lawsuits filed by several environmental groups who were concerned about the impact of such a large development on the area’s flora and fauna. FivePoint eventually negotiated a deal in 2017 that included $25 million for conservation efforts and offsetting all of the carbon emissions from the development construction as well as its operation through on-site and off-site measures.
“We’ve been involved in these communities for 15, 20, 25 years, and Emile is always looking past to where we were headed and not letting these incremental things detract or distract us,” says Lynn Jochim, chief operating officer of FivePoint, who has worked with Haddad since 1999. “Your reputation and your word is just as important as getting to the end of that journey. Our business can be looked at as transactional, and I think that Emile’s always looked at the business as a relationship.”
The FivePoint Holdings headquarters is right next to Great Park, in a large corporate campus that it purchased in 2017. From here, you can see open fields waiting to be developed, new homes being constructed, the FivePoint amphitheater, and the Great Park Balloon, an enormous orange helium balloon that is a local tourist attraction. It currently sports a large painted-on mask, which was Haddad’s idea. At the start of the pandemic shutdown, Haddad and the other three top executives decided that they would come into the office every day to continue working. Every Thursday, they hold an “E[mile] Chat” with the entire 165-person company.
“It’s one of the most compellingly compassionate exercises that I’ve seen done by a CEO,” says Rossi about the call. “It’s become a forum where people talk about what’s bothering them and how they’re dealing with the pandemic. That conversation is really an indication that he understands the importance of his people and how important culture and contact is.”
