Chevron Land Sale Demonstrates Belief in Economic Turnaround : Real estate: Analysts hail planned deal as an indicator that Wall Street and builders have renewed interest in O.C. and state.

The Wall Street firm negotiating to purchase about 18,000 acres of California land said Tuesday that it anticipates a strong recovery for the beleaguered real estate market here.

“We are investing in California with a view that our timing is good and value is good there. The local economy is coming back,” said William M. Lewis, a managing director with Morgan Stanley & Co. and president of the company’s real estate funds. “It’s a big deal.”

Chevron Corp. is exclusively negotiating to sell a large portion of its California land holdings to Morgan Stanley Real Estate Fund II LP, a $1-billion equity fund, and Orange County developer Christopher Gibbs.

The deal is expected to close early next year, Lewis said, adding that details are “still being negotiated.” Morgan has always had a strong interest in California, and California properties make up 30% of the investment giant’s $4 billion in real estate holdings, Lewis said.

The land sale would be one of the largest in recent California history and includes various residential, industrial and undeveloped properties. Because the deal is so varied, it is hard to put a value on it, real estate experts said. Some pegged the deal at $300 million to $400 million.

Included in the deal are such major undeveloped properties as 2,200 acres in the master-planned community of Coto de Caza in Orange County, a 480-acre site in Huntington Beach, the 85-acre Torrey Pines Science Park in La Jolla, 400 acres in La Habra, and more than 14,000 acres of ranchland stretching from San Diego to Calaveras County.

Real estate specialists Tuesday hailed the deal.

“It’s a strong statement by Morgan--and they are putting a lot of money behind that statement,” said Jeff Meyers of the Meyers Group, a real estate consulting firm in Irvine.

In March, Chevron announced it would sell its 40,000-acre real estate portfolio. Some properties, including 1,000 acres in Whittier, were pulled out of the Morgan deal, sources said.

“A very sophisticated and well-financed institution felt that Southern California was a better place to put their money than anywhere else in the world--and invest big amounts,” said Al Gobar, a real estate consultant in Placentia. “That’s a good indicator.”

Lewis confirmed that Morgan was negotiating exclusively to buy the property along with Gibbs, an Orange County developer.

A former chief operating officer at J.M. Peters Co., Gibbs has more than 25 years’ experience in the home-building industry. He moved to Southern California in 1969.

A graduate of the University of Oklahoma with a degree in architecture, Gibbs’ previous company was Christopher Homes, which marketed and sold homes throughout Southern California from 1978 to 1987. Last year he started Christopher Homes Development Co. in Newport Beach.

While the Orange County real estate market has seen sales decline this year--causing home builders to scale back construction plans--real estate specialists said land purchased in La Habra and Huntington Beach could net big profits for Gibbs, once the local housing market recovers.

“Gibbs will begin building on some of the land and sell other blocks to other builders,” Gobar said. “He’s got a big job ahead of him.”

Gibbs was traveling and could not be reached for comment.