Kolter Land Partners has moved into the North Carolina market with the purchase of two distressed residential land projects in Charlotte.
The business model during the downturn for Kolter, a Florida-based developer and sometimes home builder, is to purchase distressed lots and hold them for just-in-time deliveries to home builders who want to operate “land light.”
Both Charlotte projects have builders—D.R. Horton and NVR--ready to purchase the lots.
“We have been monitoring Charlotte probably beginning in the early 2008 time frame while Charlotte was still [beating] the rest of the market,” said Jim Harvey, Kolter Land’s president. The company realized that recovery in Florida might be slow and wanted to diversify its portfolio.
Kolter waited, however, worried that a meltdown in the banking sector that is a big part of Charlotte’s economy would crash the local market.
“It just didn’t really happen,” said Harvey.
In December, Kolter closed on the Hampden Village community in Concord, paying $1.6 million in a short sale. There are 47 fully developed and 115 partially developed home sites in the entry-level community. D.R. Horton has agreed to buy all the lots.
Kolter recently closed on 234 lots in Glendalough in the city of Monroe in Union County. About 134 are fully developed, and the remaining 100 are partially developed. NVR has staked a claim on that development.
“We are working on a couple of things with them to be determined,” Harvey said.
NVR was building in Glendalough before the market turned, but it then dropped the lot options, waiting until the land price fell. NVR’s business model calls for buying lots only as the company needs them, making the company a good match for Kolter’s services. “They have taken a pretty aggressive approach on reloading new communities,” Harvey said. “We see them as a big client.”
Kolter also is moving beyond the Charlotte market into Raleigh, where it has a contract pending to buy a community there, said Harvey.
Kolter isn't the only developer interested in Raleigh, where Toll Brothers and Standard Pacific Homes have both taken land positions. “Raleigh is kind of an interesting story in itself,” Harvey said. Even though the market has slowed in the last two years, “pricing just didn’t go down. Lot prices are really strong.”
In the last few months, Kolter also bought a former Levitt Homes active-adult project on Lake Lanier north of Atlanta out of the company’s bankruptcy auction. “We see ourselves as a Southeast footprint, and this gives us another series of markets to grow from,” Harvey said.
Teresa Burney is a senior editor for BUILDER and BIG BUILDER magazines.