The New Home Co. is looking to double down on Orange County’s luxury home market with its latest batch of land deals.
The Aliso Viejo-based builder is under contract to buy a quartet of land sites from Irvine Company for a little more than $250 million, according to recent company statements and regulatory filings.
The deal includes a pair of sites at the Crystal Cove residential development along Newport Coast, totaling nearly 60 home lots.
The project looks to be the first multihome residential development in the hills above Crystal Cove State Park since the last recession.
The homes are likely to carry hefty price tags. Homes developed on custom lots that were sold to individual buyers have topped $10 million, while “semi-custom” lots acquired by builders in Crystal Cove have gone for $4 million or more in the past.
Orchard Hills
Also on tap for New Home Co.: a new slate of homes at the upscale Orchard Hills development and nearby Portola Hills community, both in Irvine.
Regulatory filings showed that 195 home lots are being sold as part of the overall transaction, with the price for the land pegged at $251.8 million, or nearly $1.3 million per home lot.
The land deal looks to be the priciest acquisition to date for New Home Co., which began operations in 2009, went public last year, and has found a successful niche selling some of the higher-priced new homes in the local market.
This month the company secured an increase in its credit facility from U.S. Bank by $50 million to $175 million.
Company officials said the increase adds additional liquidity and allows New Home Co. to continue to expand and invest in new opportunities.
The land deal with Newport Beach-based Irvine Co. had yet to be completed as of earlier this month.
“We are very excited about it, and everything on the horizon says that these deals will reach fruition,” New Home Co. Chief Executive Larry Webb said this month during a call with analysts.
The land is being acquired under a “favorable option structure” common to most Irvine Co.-related land sales to builders, Chief Financial Officer Wayne Stelmar said during the same analyst call.
That Irvine Co. model, which is used by other large land owners in Orange County, reduces the capital that builders have out at any given project, which typically limits a builder’s gross profit but reduces sales risk.
“We really have underwritten these big deals based upon very strong returns on our equity,” Stelmar said.
“We’re excited about taking advantage of what we think is an improving California market,” Webb said.
Fiano Opens
The expected land deal comes as New Home Co. is rolling out another new community in Newport Beach that’s targeting wealthier home buyers.
The company last weekend opened its latest Orange County project, called Fiano. The 39-home collection of homes is in the Pacific Ridge community in the hills of Newport Coast.
Homes at Fiano range from about 4,600 square feet to more than 5,300 square feet. Prices are expected to range from $3.3 million to $3.7 million, according to regulatory filings.
Fiano is one of two Newport Beach projects New Home Co. currently has with prices topping $3 million.
Meridian, a 79-home luxury condominium project near Fashion Island that opened late last year, is close to being 50% sold, according to company filings with the Securities and Exchange Commission.
The company is currently selling homes at five projects in OC under its own name. It also is building hundreds of homes at various Irvine Co. projects in the area under a fee-building arrangement for the developer’s in-house building arm, Irvine Pacific.
