One of the largest land purchases in the Phoenix market in recent years is also one of the few that, so far at least during this area’s housing recession, have involved foreign purchasers.
Last week, BM3 Holdings acquired 7,042 acres of raw land at Festival Ranch, north of Buckeye, Ariz., for $30 million in cash, or $4,260 per acre. Greg Vogel of Land Advisors Organization, which brokered the deal, tells BUILDER that BM3 Holdings is controlled by the Ni family, who are Taiwan-based investors who have been involved in land acquisition in Arizona as far back as 1990, according to records posted online by the Arizona Corporation Commission. (The state approved BM3 Holdings’ incorporation on Oct. 22.)
The Nis and Land Advisors have done business for about 15 years, says Vogel. The real estate agent in this deal, New Horizon Realty, has represented the family for more than two decades. The Ni family, though, has been one of the rare non-American investors that have actually pulled the trigger on buying residential real estate here during Phoenix’s housing collapse. “We haven’t seen many foreign investors coming into the market in this cycle, which has been surprising,” says Vogel.
The Nis, he says, have been “passive” land investors in Greater Phoenix since the 1990s. Around 2003, the family started selling some of its land holdings, including 3,600 acres in Surprise, Ariz., in Phoenix’s Northwest Valley, which Lennar optioned for its Asante master-planned community. (Lennar or its joint-venture partner has taken down approximately 2,100 acres of that land, says Erik Molina, a land acquisitions manager for Lennar Communities Development in Tempe, Ariz. He adds, though, that Lennar no longer has the remaining land owned by the Ni family under option.)
Vogel could not comment about the Nis’ plans for the land at Festival Ranch they’ve acquired, except to note that “they are very patient investors and very intelligent.”
“The [Ni] family buys peripheral deals and waits for the rest of the world to catch up with it,” observes Nate Nathan of Nathan & Associates, which brokered the sale of land that became Festival Ranch to its previous owner, The Lyle Anderson Companies; as well as the sale of land that became Asante to the Ni family.
Nathan says “there’s more money than there is [available] land” in the Phoenix area, and investment interests have included “Canadian hedge funds, billionaire sheiks, you name it.” In September 2009, Nathan & Associates brokered a deal in which Dallas-based The Stratford Company paid $75 million to become a joint-venture partner, with Shea Homes and Sunbelt Holdings, in the 7,100-acre Vistancia master plan. That investment, which paid down a loan from GMAC, gave Stratford a 90% stake in this development.
Nathan tells BUILDER that there are at least another eight land deals in the works in Phoenix, many of them potentially larger than the BM3 Holdings-Festival Ranch transaction.
The land at Festival Ranch that BM3 Holdings acquired is adjacent to Pulte/Del Webb’s Sun City Festival and Festival Foothills communities, on about 3,000 acres, where Pulte has already built an estimated 1,500 homes and a water-treatment facility. Pulte acquired this land about from The Lyle Anderson Companies, a Scottsdale-based real estate investment and development firm. As part of this deal, Anderson has been receiving 2.25% of the closing price of every home that Del Webb sells in this community.
BM3 Holdings bought the land at Festival Ranch from an Anderson entity called 10,000 West LLC, although most of the cash from this transaction goes to Bank of Scotland, which took back this land a few years ago, says Vogel. 10,000 West LLC—which first listed the land in August through CB Richard Ellis—also transfers its revenue stream from Del Webb’s Festival community to BM3 Holdings, which could be considerable if Pulte follows through on plans to complete another 5,000 or so homes there.
John Caulfield is senior editor for BUILDER magazine.