During the last year, as real estate values spiraled ever downward, Starwood Land Ventures methodically moved across the country creating partnerships with local developers in strategically targeted markets who would have the expertise to buy the right distressed land somewhere at the bottom of the vortex.

Starwood announced its seventh such joint venture last week, a partnership with Landquest to buy and develop land in Raleigh and Charlotte, N.C., through a new entity called L Star Land. Starwood is committing $100 million to the effort while Landquest, a diversified real estate holding company focused on residential mixed-use real estate development, will ante up for the investments as well.

Starwood, an affiliate of privately held global real estate investment firm Capital Group Global, also has set up two joint ventures in California, two in Texas, one in Atlanta, and one in the Mid-Atlantic. Starwood is acting as its own developer as well as purchaser in Florida and Phoenix.

Yet to be formed are partnerships with developers who have a presence in and experience with the Chicago, Las Vegas, and, possibly, Denver markets, said Mike Moser, east region president of Starwood Land Ventures.

"Those are our top targets," he said. "When you add that group up, that's about two-thirds of the single-family residential starts in the country."

Starwood is positioning itself in markets where its analysts think the large production builders, who have dumped a good deal of their land banks in the past couple of years, are going to be looking for finished lots to purchase when the market turns around.

"We are well focused on what builders are going to be around [after the correction], who will have liquidity to build homes, and where they will likely be building," said Moser.

The depth of the pricing fall since Starwood formed in August 2007 has validated the company's business model, according to Moser. "We kind of anticipated a lot of distress, not necessarily the extreme measures we have seen in finance, but we were betting that the builders would get out of the land development business, and we want to provide that element to them [in the future]."

As it did in other markets, Starwood interviewed a number of developers in the Charlotte and Raleigh markets before deciding on Landquest. "You weed through the groups who sound like they have an interest in it, and then you narrow it down to one or two, and then pick one," said Moser.

"The joint venture formation of LStar ... completes a strategic decision for us to own and operate properties in the Carolinas," Moser said. "Landquest is widely known for and takes pride in exceptional asset management, project management, and strategic site selections--qualities that will be exceedingly important to this partnership"

Raleigh and Charlotte are expected to be among the first markets to recover because there weren't a lot of speculative buyers there in the first place. With their diverse industries, moderate prices, central east-coast location, four-season climate, and universities, both cities are expected to continue to be desirable places to live.

Landquest president Kyle Corkum said he believes prices in Raleigh and Charlotte are already starting to bottom out. "We have the benefit of coming in as the knife is hitting the floor," he said. "We think that the rebound will happen much sooner here than it will elsewhere."

Corkum said Landquest stopped buying land about two years ago, choosing to buy options instead as management became convinced that the market bubble was about to burst.

"We were pulling back when a lot of these people were buying," Corkum said. "We spent the last year redefining our firm and the capabilities of our firm. We eliminated permitting and planning staff and recomposed ourselves as a firm full of analysts and demographers and financial modeling people" who could better assess where to buy and when to buy distressed land.

"We actually predicted that it would go to the point of lenders trying to withdraw capital from the market," Corkum said. "We were looking for funds that we believed would be anticipating the very same conditions. At the same time Starwood was out looking for people who though the same way. ... They were vetting us, and we were evaluating their underwriting to see if we could see things the same way."

Actually, Corkum has waited for this real estate recession since 1989 when, in his formative years as a land acquirer, he watched the price of real estate fall and his friends lose their jobs. Then he watched as companies such as Toll Brothers snapped up land at bargain prices.

"They built their future off of that down cycle," Corkum said. "They paid a fraction for what we had put them together for. It was stunning and horrifying. ... It was imprinted on me that when these things occur, this is what happens. I've spent the rest of my career thinking, 'When is the next one coming?'"