RESIDENTIAL DEVELOPMENT INVESTOR Hearthstone is using cash to fuel William Lyon Homes' expansion in Southern California. Hearthstone recently signed off on more than $80 million in structured financing for two communities in the San Diego area.

The first deal, which was inked to the tune of $61.4 million in a lot option transaction, will help fund the development of 83 single-family homes within the master planned community of Del Sur in the Black Mountain Ranch region. The homes come with price tags ranging from $755,000 to $770,000.

The second agreement—also a lot transaction—totaled $23.4 million. The financing enables the construction of 60 high-end, single-family homes in the 4S Ranch community west of Rancho Bernardo. The homes are priced from $795,000 to $861,900.

Anthony Botte, Hearthstone senior vice president for the western U.S., says the firm's heavy investment in the San Diego area is a product of the market's housing “demand completely outstripping supply.” And although Hearthstone works with other Southern California builders, Botte says William Lyon Homes was an appealing partner because the company exhibits strong leadership at every level, is sensitive to market stipulations, and can execute well. “We like to invest in people who know what they're doing,” Botte explains.

Also in the San Diego area, Hearthstone has committed more than $100 million in joint venture commitments to the Del Mar-based Davidson Communities for two high-end communities. And it committed $44 million to John Laing Homes for a master planned community in Oceanside. Already Hearthstone has invested more than $200 million in local home builders in 2005.

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