PROJECT IN PALMDALE LOSING A PARTNER.

Byline: Charles F. Bostwick Staff Writer

PALMDALE - The Newhall Land and Farming Company wants to pull out of its partnership with Kaufman and Broad to develop the 4,500-home City Ranch master-planned community in west Palmdale.

Newhall Land intends to concentrate on its corporate campaign to buy back blocks of its own stock, which company officials believe is undervalued and thus a good investment.

``We are working with Kaufman and Broad on discontinuing our partnership at City Ranch, particularly because of our need to focus on our corporate strategy, which is our unit (stock) repurchase program,'' spokeswoman Marlee Lauffer said.

The companies have been talking for several weeks about dissolving the partnership, but Lauffer said she couldn't predict when they might reach an agreement.

Despite Newhall Land's decision, Kaufman and Broad says it will continue with the project, which was approved by the city in 1993 but stalled by the recession.

``We might do that with another partner, we might do that without another partner. It's hard to say right now,'' Kaufman and Broad spokeswoman Amy Friend said. ``But we're definitely committed to the project.''

As part of City Ranch, Kaufman and Broad is already building 200 houses in the Delta Ridge tract on Elizabeth Lake Road.

Planned on what is now cattle land in the Ana Verde Valley, City Ranch is to include some 5,000 homes and apartments, neighborhood shopping centers, schools, a lake, parks, riding and hiking trails and a public golf course.

The companies had announced in August 1999 that they were forming a joint venture under which Newhall Land acquired a 50.1 percent interest in the 1,900-acre project and would act as the master developer.

Newhall Land officials predicted then that construction of streets, sewers, water lines would begin early this year, but no work has occurred.

Lauffer said the company's pullout is not a sign that it was dissatisfied with the Antelope Valley's business potential.

``It's certainly absolutely not a reflection on the Antelope Valley market,'' she said. ``We remain convinced that's the perfect market for entry and move-up buyers.''

Real estate analyst Katherine E. Flores, with brokerage and investment banking firm Sutro and Co., said she is not surprised that Newhall Land wants to pull out of the Palmdale project.

Newhall Land has been trying to buy back its stock, taking on debt to do so and planning to get rid of the debt by selling off income-producing assets, like the Valencia Town Center mall, she noted.

But retiring the debt might be taking longer than expected, Flores said, pointing to the cancellation of the mall sale because of the bankruptcy filing by Edwards Cinemas.

``I can see that the company could want to regroup and focus on its core market,'' Flores said.