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There is an old and gruesome saying that death comes in threes. Last week, the Walt Disney Co. (NYSE:DIS) announced the death of two of its major real estate projects – and that leaves the morbid-minded speculating over which project will complete the rest-in-peace trifecta.

The first pulled plug involved CEO Bob Iger’s cancelation of the Lake Nona complex in the Orlando area near Walt Disney World. This initiative was budgeted at more than $1 billion and was supposed to relocate 2,000 jobs from California to Florida. Many people saw the termination of the project as the latest volley in the company’s ongoing political feud with Florida Gov. Ron DeSantis, although Disney observers noted that many employees were balking at the prospect of relocating to Florida – and DeSantis’ office tartly noted there was no progress on the project since it was announced in 2021.

The other cancelation was somewhat more surprising because it involved the shuttering of an existing development: the immersive Star Wars: Galactic Starcruiser luxury hotel in Orlando, which opened less than two years ago, and Disney couldn’t blame DeSantis for this failure. Instead, it erred badly in overcharging its guests: all visits to this Star Wars-themed venue were limited to two nights with a starting cost of more than $4,800 for two people and roughly $6,000 for a family of four. The hotel never won the hearts of the Star Wars addicts and its excessive costs shut out too many potential guests – a situation that would clearly become more acute as the economy frays its way into a recession. The venue is slated to close at the end of September.

So, if death really comes in threes, what is the next Disney property to disappear? One of the smartest Disney experts in the media, Jennifer Winarski of the Inside the Magic blog, is predicting the victim could be Cotino, a proposed mixed-use community in Rancho Mirage, California, that is the first entry in the Storyliving by Disney real estate project. This endeavor was proposed last year as a 618-acre complex featuring hotels, resort facilities, retail and 1,900 residences – the latter will feature a section reserved for homeowners ages 55 and older.

Winarski’s prediction has a great deal of value. For starters, this was a pet project of Bob Chapek, who was unceremoniously dumped as Disney’s chief executive last year after a disastrous skein of errors that saw the company as the constant center of controversy and bad business decisions. Both Lake Nona and the Star Wars hotel were Chapek’s pet projects and Iger – who was Disney’s CEO for 15 years before Chapek took the reins – has shown no eagerness to preserve Chapek’s legacy.

Second, Iger is in the midst of a major cost-cutting spree to help get the company back into financial health. Lake Nona had already run over budget before any construction began and the costs of the Star Wars hotel outweighed its benefits, so it was easy to jettison those projects. Disney has conspicuously refused to share either Cotino’s construction costs or the home prices of the residences in the development, which suggests this might be their next money pit.

Third, California already has some of the most expensive residential real estate in the country – the median home price is above the $800,000 mark – and the very last thing the state needs is more luxury housing.

On the other hand, there are a few things that might play in Cotino’s favor. This development is supposed to be the first in the Storyliving by Disney operations. Pulling the plug on this – or even delaying its creation – would be an embarrassment for a company that includes residential real estate development as part of its portfolio. Also, shutting down the construction of the project would impact the California economy and create problems in Disney’s relationship with California Gov. Gavin Newsom, who happily gloated over Florida’s loss of Lake Nona and who shares Iger’s political views.

Of course, if Iger was serious about saving his company money, he might lead by example and reconfigure his compensation – he receives a $1 million base salary, he is entitled to an annual bonus of up to $1 million and he enjoys $25 million per year in stock options; his current two-year employment pact is over at the end of 2024, which means he will be pocketing $54 million over the course of his contract. Gee, I wonder if he’ll be using that Mickey Mouse money to invest in real estate.

Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected]. 

Photo by Carlos / Flickr Creative Commons