A fund managed by New York City-based GTIS Partners invested 70% of the equity capital, while San Diego-based SWVP contributed the remaining 30% of equity capital. SWVP, a privately-held real estate investment company will manage the day-to-day operations of the partnership.
Located in northern Pinal County along Hunt Highway, Merrill Ranch is about 30 minutes southeast of the Gilbert/Chandler/Mesa submarkets. The parcel is partially entitled for up to 18,000 residential lots and an additional 900 acres are fully entitled for commercial use. The commercial portion could eventually accommodate more than 2 million square feet of retail or office, according to Tom Shapiro, president of GTIS Partners.
A group of more than 60 sub-participant banks and the FDIC, led by the People's Bank of Winder, foreclosed on the property in February 2009. Atlanta-based Bull Realty was chosen to market the property. During the first 60 days on the market, Bull produced 12 cash offers for the property. Start to finish, Bull had generated over 20 cash offers from buyers across North America.
Nathan & Associates Inc., a local residential land brokerage company, served as an advisor to both parties on the purchase and will continue to provide sales and marketing services to the partnership. Jeremy McArthur with McArthur Land Company of Phoenix represented the buyer in the transaction.
This is the first deal in which SWVP and GTIS Partners have joint ventured, Shapiro tells GlobeSt. "Both of us try to find unique investment opportunities, and this is one of those situations."
Shapiro says GTIS Partners has not made an investment in the U.S. in more than two years. Instead, firm has been focused on Brazil, where the residential market slumped five years ago. "The situation in the U.S. today is very similar to where Brazil was five years ago," he says.
Shapiro says the partnership has no plans to do anything to the land in the short-term. "We have no time pressure because we bought this unleveraged," he explains. "We think we bought a terrific piece of land that can be held for investment until the timing is right."
Shapiro notes that public homebuilders are now recapitalized and actively buying finished lots. Once homebuyers run through finished lots, they will seek out entitled land like Merrill Ranch. "The plan is for us to sell off the land in pieces," he says. "But the real key is for us is to wait this out and be ready for the recovery."
In addition to the 4,500 acres, Bull Realty also sold off another 1,182 acres of Merrill Ranch in December 2009. The land sold was $8.6 million to U1 Resources Inc., a local firm that plans to develop the land in the future.
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