MIAMI—A joint venture between Starwood Capital Group and Land Strategies Management (DBA Starwood Land Advisors) said Thursday it had acquired a portfolio of residential development projects from Forestar Group, now a subsidiary of D.R. Horton Inc. (DHI) after DHI won a bidding war with Starwood Capital last summer. The $232-million acquisition also includes multifamily and commercial assets.
“The acquisition of a portfolio of this size and quality in many of our favored growth markets is a rare opportunity in the residential land sector,” says VP David Baker of Starwood Capital. “Our extensive land development experience and longstanding relationships with both Forestar and D.R. Horton allowed us to execute this transaction quickly, efficiently and on an off-market basis.”
The portfolio is primarily comprised of nearly 4,800 fully entitled residential lots spread across 20 projects in several of the nation's top homebuilding markets, including Dallas, Austin, San Antonio, Houston, Charlotte, Nashville, Raleigh and Denver. There is also a JV interest in an existing multifamily community in the Houston suburb of Katy, TX, additional commercial land within six distinct projects and 730 acres of unentitled land in Southern California. Land Strategies Management will manage the assets on the JV's behalf.
“Rising household formations, strong job creation, and improving wage growth has created significant pent-up demand across the buyer spectrum with a particular focus on starter and first-time move-up homes,” says Baker. “Ninety-five percent of this portfolio is concentrated in markets with less than four months of resale supply while housing starts remain well below long-term averages. Collectively, these healthy supply-demand fundamentals are driving homebuilders to seek finished lots in well-located communities in commuter corridors throughout these markets.”
At Austin, TX-based Forestar, executive chairman Donald J. Tomnitz says, “Divesting these legacy projects will help streamline our business and provide capital for future growth. We plan to invest this capital primarily into new land development projects to improve returns and enhance value for our shareholders.”
This asset sale does not impact the Forestar expectations announced by DHI on its Jan. 31 conference call, Forestar said Thursday. In fiscal 2018, Forestar expects to invest approximately $400 million in land acquisition and development from both its existing cash and the cash flow generated from its legacy portfolio. Forestar also expects its annual deliveries to grow to approximately 10,000 lots by fiscal 2020.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
