The recovery of Utah-based Woodside Homes, which emerged from bankruptcy last year, has taken forward steps in four Western markets where, in recent months, Woodside has completed land acquisition deals that include more than 400 home sites. Woodside’s growth strategy, says CEO Joel Shine, is to “go where there’s a little less competition” from builders or existing homes, with an emphasis on being near job centers. Its biggest deal to date since coming out of Chapter 11 has been in Temecula, Calif., where Woodside placed in escrow $7.2 million to buy 210 finished and unfinished condominium lots.
This community, known as Maravilla, has an interesting history: Developer American Property Enterprises paid $10 million to buy this 21-acre tract in 2003, sold it to a public builder two years later for $20 million, and then reacquired the land—into which the builder had invested another $6.4 million in improvements and impact fees—for $3 million in 2008.
Early next year, Woodside expects to start vertical construction at Maravilla, where it intends to build attached homes sized between 1,124 and 1,753 square feet, with selling prices in the high $100s. That pricing, says Shine, will allow Woodside’s product to compete with rental housing. Maravilla, which is located just off Interstate 15, is also within walking distance from businesses, shopping, and entertainment.
Woodside strengthened its position in three other markets as well:
• In the Las Vegas suburb of Summerlin, Woodside has put down an undisclosed amount of cash for 17 lots in a community called Barcelona, with an option to purchase 40 more lots there;
• In Mesa, Ariz., Woodside acquired 125 finished townhouse lots from a bank. The builder intends to modify the plat and target first-time buyers, empty nesters, and second-home purchases with single-family homes sized between 1,100 and 1,900 square feet and priced in the low $100s. In that same metropolitan market, Woodside acquired 29 unfinished infill townhouse lots located near the Ocotillo golf course. It intends to retool these lots into single-family detached homes in the 2,000- to 2,900-square-foot range that would be priced in the low $300s. Woodside asserts that these new homes will be the first in this community to be offered at an entry-level price point for quite some time.
• In July, Woodside closed on 30 finished lots in Roy, Utah, which is located between employment centers of Clearfield, Ogden/Riverdale, and Hill Air Force Base. It is now offering homes in this market that sell in the mid-$100s to the low $200s, with the average 1,850-square-foot house going for $199,000.
Shine says that because Woodside is both a land developer and builder, it can pursue certain land deals that might be less attractive to other builders which developing isn't a skill set.
While Woodside is currently focusing on “smaller, bite-sized deals,” it isn’t shying from making larger purchases, although it would probably engage a financial partner for such transactions. Shine notes that Woodside is operating under some financial mandates associated with its reorganization from bankruptcy. “And there’s only a limited amount of money our board has authorized” for expansion, he explains.
Another factor restraining growth is the flow of good land deals available, which Shine describes as “getting better [but] relatively limited.” He notes that banks are still tying up real estate until market conditions improve their chances for higher returns upon sales.
But that’s not keeping Woodside from looking for other land-acquisition opportunities. Given how the company is now considerably smaller than it once was, “we could drop another one or two deals on our divisions and they would welcome them.”
John Caulfield is senior editor for BUILDER magazine.