For the third time this year, Toronto-based Tricon Capital Group and Shea Homes have teamed up to build an active adult project. Following two projects earlier in the year—March’s Vistancia West deal in Phoenix and July’s Lake Norman deal in northwest Charlotte, N.C.—Tricon announced that it was investing $103.5 million to build 1,079 homes in an age-targeted, resort style community located on the border of North Scottsdale in Phoenix.
The real estate investor is providing $10.4 million, while one of its institutional partners contributed $93.1 million. This is just another in a long line of home building moves for Tricon, who teamed up with Houston-based Johnson Development this year and invested in the The New Home Co. in 2011.
This transaction increases Tricon's total assets under management by $103.5 million or 5 percent, to a total of $2.2 billion and externally managed assets by 8 percent to $1.2 billion.
"Supported by investments from our institutional partners, these independent investment opportunities have contributed to growth of 44 percent in our externally managed assets in the last 12 months,” said David Berman, Tricon's chairman and CEO, in a press statement.
The project will be under Shea’s Trilogy active lifestyle brand. Tricon was attracted to the project because of its proximity to the affluent North Scottsdale corridor, which has higher income metrics than the greater Phoenix metropolitan area and no existing new-home communities. The company also liked the site’s location—adjacent to the Tonto National Forest and the McDowell Mountain Regional Park—and the fact that much of its development infrastructure was in place, including a Ken Kavanaugh–designed 18-hole championship golf course, lakes, major spine roads, bridges, and grading.
That said, this may be its last active adult investment in the volatile Phoenix market, which was buried under supply during the last downturn. Margaret Whalen, Tricon’s CFO, says the company probably will seek active adult deals in other Sun Belt markets. “We have a lot of exposure to Phoenix already so we're most likely to look for active adult [opportunities] in other markets at this point,” she says.