HOWARD PRESS, PRESIDENT OF SANTA Monica, Calif.-based Watt Developers, took interest in a property in a developed area of Pomona, Calif., as an attractive spot to squeeze in some new townhomes. Infill opportunities often come with lots of complicated baggage, and this parcel was no exception. Last summer, the critical moment arrived for Watt to face up to the complexities, and Press needed to put up or get out of the deal. For one, it was a commercial property—a shopping center that still had tenants in it. Press' team had zero experience navigating deals as tricky and sticky as that. Fortunately for the Watt group, it was their financier partners who knew just about every button to press, every form to fill out, every phone call to make, every question to ask, and every diligence issue to raise and resolve to bring the project to entitlement and get the building started.
That financier was CityView, largely the brainchild of Henry Cisneros, former Housing and Urban Development secretary under President Clinton. Cisneros, CityView's chairman, has in short order put together a kind of urban home development financial dream-team, starting with CEO Joel Shine, himself a third-generation home builder. CityView is now on pace to shoot from zero to $750 million worth of housing project involvements in less than 36 months.
“I've been in home building for 20 years, but this was a commercial property,” says Press of the shopping center project. “There were things associated with [the project] that we needed to understand that Joel came in and aided us with, [such as] how to deal with terminating leases and making sure that we were legally protected so that we could get [tenants] out when we wanted to. We did all our due diligence, they reviewed all of our due diligence, and we got the deal done.”
If it sounds as if this type and level of service goes beyond the call of duty for your average home builder financier, CityView is not your average financier. If need be, CityView can, as Cisneros says, “walk through every step of the process, A through Z, from planning the site, to identifying the product, to focusing on the design and architectural considerations, to bringing our capital to match with other sources of capital, to going through the government approval process, to actually participating in the development of the site.”
When it comes to urban infill, CityView's boutique of proficiencies—with its unique home building skill set and one-stop-shop palette of services—has caught the eye of bigger builders as well. In fact, among CityView's biggest fans today are big builders who already have developed a certain level of know-how in the infill arena, such as John Laing Homes.
With spheres of expertise uniquely tailored for the burgeoning workforce infill segment and a capital base that is expected to keep growing bigger, CityView is positioning itself to be a major partner for builders looking to stay one step ahead of infill trends in the West. Can the demand for CitiView's S.W.A.T.-team approach in other parts of the country be far behind?
Capturing Builders' Attention John Laing Homes now has two projects under way that involved deals with CityView. The Boulevard, which is located in Anaheim and was scheduled for completion in late 2004, will consist of 20 detached and 36 attached units. The Inglewood project is to include 122 small-lot detached units. (Sales are expected to begin this year.) The relationship between CityView and John Laing apparently has only just begun. According to CFO Wayne Stelmar, the builder expects to partner with CityView for two or three projects a year in 2005, 2006, and 2007.
The fact that the Newport Beach-based builder has chosen to do business with CityView is significant for a couple of reasons. First, John Laing is a big builder with many capital sources it might tap. Second, the company has made infill a centerpiece of its strategy in California, with a rather bold decision to grow by focusing on the already built-out areas it already knows intimately, versus looking to expand into other territory where land might be more plentiful. The takeaway here: A big builder who already is a leader in infill initiatives—one that already has a demonstrated level of in-house infill know-how—believes there's an advantage in partnering with CityView.
The seed for the idea of CityView, which already has no less than a letter of intent with six to nine builders after being in existence for less than two years, actually originated out of Cisneros' affiliation with a big builder. Cisneros and KB Home chairman and CEO Bruce Karatz were friends since the time of the 1994 Northridge earthquake, when Cisneros was secretary of HUD. In the ensuing years, Cisneros proved to be a visionary, increasingly preoccupied with the idea that central city neighborhoods had a huge market potential. “It was something I was thinking about, and I was wondering why the large builders were not making the effort,” says Cisneros. “We concluded that it was time to try such a thing.”
Learn more about markets featured in this article: Los Angeles, CA.