THERE ARE PLENTY OF DEVELOPERS who would like nothing better than to sell builders finished lots. But what about builders who find a great piece of ground but are not particularly keen on developing it?

One alternative is The Atlantic Co., an Iselin, N.J.-based land acquisition and development company that offers both public and private builders a way to secure land, install the necessary improvements, and control their inventory of lots—all without putting a big dent in their balance sheets.

The nine-year-old company will purchase the land identified by the builder, put in all the infrastructure, and sell the finished sites to the builder under a flexible purchase agreement based entirely on the builder's projected delivery schedule.

Lots can be purchased on a quarterly basis, or even monthly, as the builder chooses. And if sales exceed expectations, the purchase schedule can be accelerated without penalty.

Dual Roles Welcome to the future of home building—or at least Ralph Grebow's vision of it.

DEALMAKERS: The Atlantic Co. will purchase land identified by a builder, put in the necessary infrastructure, and sell the finished lots back to the builder under a flexible purchase agreement. “In the old days, everybody was a vertical builder. They did everything: They bought the land, obtained the approvals, put in the improvements, and did the building and selling,” says Grebow, who formed The Atlantic Co., or TAC, in 1995.

“Today, builders want to be manufacturers. It's what they do best. And they want to employ all the principles of ‘just-in-time inventories'. That means owning the lots for as short a period as possible,” he says.

Perhaps the best way to describe TAC is as a hybrid—a cross between an investment fund and a developer. Few financial organizations offer land development services. And most developers don't have the capital to back individual builders. But TAC does both.

“We provide the financing that national and regional public and private builders regularly obtain from land bankers or investment funds, and combine it with the ability to provide finished lots,” says Grebow. “We are neither a land banker nor a private investment firm. We are a real estate development firm that provides substantial capital alternatives and development flexibility.

“In my view, we are no different from any other vendor. But ours is a unique, one-stop shopping concept for large builders. We give them the opportunity to tie up ground without actually purchasing it. We think it is the way of the future.”

Attorney's Eye As a former trial attorney in the Essex County, N.J., prosecutor's office, Grebow says he “gravitated” toward real estate when he went into private practice in the late 1980s. And after cutting his teeth representing builders on approvals and permitting, he segued into the transactional side of the business, representing clients on their land buys as well as doing a few development deals on his own.

In the mid-90s, after 25 years of practicing law, he retired from the profession and opened his own real estate company, doing primarily title work but also managing “a variety of other things,” he says.

LOT LIASONS: An unfinished lot (top) was purchased by The Atlantic Co. and improvements were made before being sold to the builder. After a few years holding his own, Grebow was offered a deal in New Jersey, a deal he took to NVR (known then as NV Homes), the McLean, Va.-based builder and parent of Ryan Homes. Like most large builders, NVR was interested only in improved and permitted lots. But the company liked the property and suggested that if TAC would develop it, it would buy the finished product.

The former lawyer jumped at the chance, and an enterprise was born.

“Between doing these types of deals, as well as our own deals when and where we could, I realized this had the making of a good business,” Grebow says. “And a few years ago, things just really took off.”

Now an eight-person firm, Grebow's operation has developed properties on behalf of Ryan, U.S. Home, and a variety of other builders in New Jersey, Pennsylvania, and Delaware. Grebow says he has his eyes on Northern Virginia, Florida, Phoenix, and Las Vegas, among other places. He remains reticent to discuss particulars—as are his clients—citing the confidential nature of their deals.

“Information on our deals is considered proprietary by many of the builders, and we are not comfortable disseminating these facts,” says marketing director Joan Guarino.

Feeling Flexible Grebow is more than willing to open up about TAC's modus operandi, which he says is a “simple, yet innovative” program in which builders can get in and get out without tying up a lot of capital.

“The concept of our ‘off balance sheet' business is not complicated,” Grebow says. “The Atlantic Co. provides finished lots to builders. We buy land of significant size that has been identified by builders but who want to buy it as finished lots; we put in the improvements and sell the lots to the builder.”

TAC won't touch ground that hasn't been approved for development. “We won't take that risk,” the developer says. “Some people do it, but I don't.”

Once the entitlements are in place, the company acquires the land, puts in the improvements—“the roads, the pipes, everything,” says Grebow—and then sells the lots to the builder, either in a lump sum amount or as called for under an agreed-upon but extremely flexible takedown schedule.

Based on the pace and timing of the builder's anticipated delivery schedule, finished lots can be purchased on a monthly or quarterly basis. Builders who sell faster than expected can accelerate their take-downs. And although the contract specifies that the builder must purchase the lots no later than promised, Grebow says he'll let the buyer out of the deal if necessary.

“It's never happened, and I don't expect it to happen; approved land is too valuable,” he says. “But our option agreements are not based on specific performance, so builders can opt out. It leaves us owning a valuable piece of ground that is approved and improved.”

TAC charges no fees. But at closing, the builder must put up a minimum, non-refundable deposit equal to 5 percent of the total contract price. However, the entire deposit is amortized on a pro-rata basis as lots are purchased so the credit is applied evenly over the total number of sites.

The negotiated price per lot can be fixed throughout the entire contract term, escalate over the course of the agreement, or even be lower in the early stages and higher later to take advantage of rising prices.

Bonds and other security requirements can be the obligation of either the developer or the builder. But TAC will arrange for the construction or pay for any amenities package required by the builder. And it will co-sponsor any offering statements or homeowners associations necessary for any common elements.

“We are trying to be a flexible as possible so we're able to provide a service,” says Grebow. And apparently builders are finding that to be a pretty good service.