Hedge fund demands sale of company's namesake property.

California Coastal Communities, Inc. (NASDAQ: CALC) has been told by a hedge fund group holding 11 percent of its stock, to auction off its 105-acre Brightwater Project. The 349-unit project lies on 105 acres overlooking the Bolsa Chica Ecological Reserve and was was approved in April by the California Coastal Commission.

The hedge fund, Mellon HBV Alternative Strategies, is the not the only shareholder to recently call on California Coastal to abandon development plans. Mercury Real Estate Advisors LLC, a fund holding some 9.4 percent of the company, told the company in an April 26 letter that it should sell the company rather than develop Bolsa Chica. The Mellon HBV demand comes amid a spate of activist moves by hedge funds, who typically buy large stakes in underperforming companies and demand strategic changes to make a quicker return. Often such demands escalate into proxy contests for board seats.

According to a letter to California Coastal Communities that the hedge fund has filed with the U.S. Securities and Exchange Commission, Mellon claimed that they “did not want to assume the risk of developing the property nor wait two years before recognizing a return on our investment…We would suggest that if management wants to assume that risk (of developing the property), they and any stockholders with a similar view can do it themselves by taking the company private.” said Mellon HBV in the letter.

In 1992, Henley Properties changed its name to The Bolsa Chica Company upon merger with The Henley Group, Inc. The Company once again changed its name in 1993 to Koll Real Estate Group, Inc. upon the acquisition of the commercial development business of The Koll Company. In 1998, the Company sold its commercial development business and changed its name to California Coastal Communities, Inc. The Company and its subsidiaries are headquartered in Irvine, California and currently employs 64 professionals. Their common stock is listed with the National Association of Securities Dealer, Inc.

Last Sale: $ 33.97 Net Change: 0.25 0.73%
Share Volume: 65,315 Previous Close: $ 34.22
Today’s High: $ 34.61 Today’s Low: $ 32.90
Best Bid: N/A Best Ask: N/A
52 Week High: $ 40.10 52 Week Low: $ 27
P/E Ratio: 13.87 Shares Outstanding: 10,161,000
Earnings Per Share (EPS): $ 2.45 Market Value: $ 345,169,170
NASDAQ Official Open Price: $ 34.28 Date of Open Price: May 12, 2006
NASDAQ Official Close Price: $ 33.97 Date of Close Price: May 12, 2006