Standard Pacific Homes, which has plans to buy close to $400 million in land this year, has announced the details of one deal with New Urban West for 450 acres of land in north San Diego County.
The Irvine, Calif.-based company has acquired the options to buy Harmony Grove Village, which has entitlements in place for 750 homes, two years from now, said Scott Stowell, the company's chief operating officer. Standard Pacific will spend the next two years doing final engineering and site preparation for the property before buying it, he said.
"We'll spend a couple of million (dollars) to take that risk," said Stowell.
The hard work of assembling the land from nine individual owners and getting the entitlements and planning in place took about seven years and was already done by New Urban West principal Glenn Cardosa, Stowell said.
"At the end of the recession in housing (New Urban West) was not in position to put any more money into it, and the options were expiring," said Stowell. "He (Cardosa) was looking for a partner he could trust."
So Standard Pacific spent nine months renegotiating the options with the individual owners of the land. Full payment will come due in two years when the equestrian-oriented neighborhood is expected to be ready for home construction to begin. The total price tag for the project, including all the development costs, are expected to total $150 million, Stowell said.
Cardosa will continue as a partner in parts of the venture, which will include an equestrian center and a few other assets on the land, Stowell said.
Standard Pacific plans to grade in three phases of the development, starting in the center of the project with the least affordable lots and then working up into the hills of the parcel with more expensive lots later as the market recovers, said Peter Kiesecker, Standard Pacific's senior vice president of mergers and large land acquisitions. "We will build at least 50% of it and we will sell some lots" to other builders, he said.
Homes will be alley-loaded with front porches, and the community will include horse and hiker trails.
The Harmony Grove Village deal is an example of the builder's current strategy. Standard Pacific CEO Ken Campbell reiterated that the company is "going land-heavy" and taking advantage of market-depressed land prices.
At the end of its second quarter, the company had $270 million of approved land purchases and option contracts outstanding, of which $126 million is expected to be bought in 2010 and $144 million to be purchased next year and beyond. It spent $103 million ($79.4 million in cash) to buy 1,875 lots, 78% of them in California.
"We are all about being strong when the market picks up--like a sports team that peaks for the playoffs," said Campbell.
Teresa Burney is a senior editor for BUILDER and BIG BUILDER magazines.