Santa Ana-based City Ventures LLC doesn’t have the history of some homebuilders here. But it certainly has the land.
A little more than two years after starting up, City Ventures has bought more than 3,500 lots for homes across California, spending an estimated $100 million-plus.
In the past two months, the company has done close to $45 million in land deals—buying a combination of large, inland lots and smaller sites closer to the coast.
The recent deals in Carlsbad, Alhambra, Ontario, Victorville and elsewhere have added more than 1,300 lots to the company’s holdings.
In what likely was its priciest deal, City Ventures bought close to 95 acres in Glendora from Azusa’s Monrovia Nursery Co., for a price reported in the $20 million range.
The land has room for some 120 homes, which are likely to sell at more that $1 million each.
Closer to home, City Ventures is said to be nearing a deal for land in Santa Ana. It would be one of several buys it’s made in its hometown.
The company also has projects in the works in Brea and Yorba Linda.
Other homebuilders, some still reeling from the downturn, “can be slow at best, or lack capital,” City Ventures cofounder and Chairman Craig Atkins said. “We can close fast.”
The deal making has rivaled that of the busiest in the state.
Irvine’s Standard Pacific Corp., one of the more active buyers of California land for homes in the past year, closed on about $34 million worth of deals last quarter, snapping up 750 lots.
All told, more than $500 million in Southern California land deals were completed in the fourth quarter and so far in 2011, according to Corona del Mar housing consultant Meyers LLC.
The current market for land buying is “very active,” according to Meyers, thanks in part to companies such as City Ventures that have fresh funding.
Funding
City Ventures got a $100 million investment from Los Angeles-based asset management firm Ares Management LLC last year. It’s since gotten another infusion of cash from Ares and has other private investors.
The company’s backers are in it for the long haul, according to Atkins.
That said, “We’re open to all exits in the future,” he said.
A still sluggish market for homebuilders in California doesn’t appear to faze the company.
“We’re contrarians,” said Atkins, who earlier helped start and run now defunct land brokerage O’Donnell/Atkins of Irvine. “We’re willing to invest before others.”
Ambitious Goal
The goal, according to Atkins, is to own land that will support 10,000 homes and then build them.
The goal is ambitious.
Aliso Viejo-based Five Point Communities LLC, a master developer that’s owned by Lennar Corp., has plans for nearly 5,000 homes to be built and sold at the former El Toro Marine base in the next eight to 10 years.
City Ventures’ plans are to have about 15 housing projects open and selling this year, said Herb Gardner, president of the company’s homebuilding division.
The company now has homes selling at five projects, including lofts in downtown Santa Ana starting at about $350,000, and detached homes in Carlsbad that start around $650,000.
An upscale project in Pasadena at the former site of Ambassador College is set to start selling later this year.
The project is expected to be the company’s priciest, with homes starting at around $1.5 million.
Privately held City Ventures doesn’t disclose detailed financials. The company was profitable last year and should be in 2011, according to Atkins.
The company is aiming to do about $100 million in revenue this year, selling “a couple hundred homes” in the process, Gardner said.
Building and selling as many as 1,000 homes a year isn’t out of the question, according to City Ventures executives.
That would rank the company as one of the biggest homebuilders based here.
Standard Pacific, the largest homebuilder based in the county, sold 2,646 homes last year. Newport Beach’s William Lyon Homes Inc. sold 617 home in the first nine months of 2010.
City Ventures isn’t predicting a return to the recent housing boom. But officials said they think the company can see strong profits on their investments.
“It’s going to be a long, slow road,” Atkins said. “We’re not certain when the market will peak (again). But we’re certain of the cycle.”
The company’s edge lies in the fact that it’s not carrying much debt and troubled land. Executives also stress City Ventures’ policy of lean, efficient building.
“Before, you didn’t have to worry about execution,” Atkins said.
The company’s plan: build in good locations and sell at prices that will attract buyers.
At La Costa Ridge in Carlsbad, City Ventures’ homes start at more than $200,000 less than comparable area homes, according to the company.
Buyers are more selective and cost conscious, Gardner said, but “demand’s never waned in desirable areas.”
Gardner has spent 25 years in homebuilding, most recently as a regional president for Seal Beach-based Olson Co.
City Ventures cofounder and Chief Executive Mark Buckland was president and cofounder of Olson, best known for urban infill projects.
City Ventures has a number of other former Olson folks, as well as onetime employees of O’Donnell/Atkins, Irvine’s SunCal Cos. and John Laing Homes, an Irvine-based homebuilder that went out of business in 2009.
City Ventures counts about 30 people at its offices and another 25 or so in the field.
The company’s executive offices are full of business plans, architectural renderings and resumes. The company’s looking to hire close to 50 people for building positions, Gardner said.
City Ventures shares office space with William Hezmalhalch Architects on Red Hill Avenue. A reminder of the tough housing market is just a few blocks away with Tustin’s stalled Legacy Park development at the city’s former Marine base.
City Venture executives said they’d like to buy a small headquarters building they can redevelop in their own image.
Growth has come quickly. Late last year, City Ventures started CV Communities LLC, a unit focused on suburban development, particularly in the Inland Empire.
August Belmont, a former executive at Standard Pacific, heads the division.
Projects east of Interstate 15 are likely to fall under CV Communities. Developments closer to the coast are part of the more urban City Ventures division.
Some of the land under the suburban division could be held for a few years before building, Belmont said.
City Ventures has bought close to 1,000 lots for the division in the past few months, including a Victorville deal that should result in more than 600 homes.
Lost Deals
A few deals have gotten away from City Ventures. Most notably: a $26 million deal to buy land and buildings from Newport Beach’s Conexant Systems Inc. that fell apart last year.
An investment group headed up by Irvine’s Shopoff Group LP ended up buying the 25 acres from the chipmaker.
In mid-2010, when publicly traded builders stepped up their land buys, City Ventures pulled back and waited for the market to become less frenzied.
“We lost a few deals to public companies,” Atkins said.
