Newport Beach-based William Lyon Homes Inc. has bought 165 acres in California, Arizona and Nevada in a deal that appears to be its largest acquisition of 2012.
The builder, which emerged from a short stint in bankruptcy earlier this year, closed on the land buy late last month. The deal includes more than 1,000 home lots spread over seven separate residential for-sale developments.
The properties sold for $21.5 million, or about $130,000 per acre.
California land trading hands in the deal includes property in San Diego and San Bernardino counties, while the out-of-state land was located in southern Nevada as well as the area around Phoenix.
The deal represents a sizable boost to William Lyon Homes’ land holdings; the company owned a little more than 10,000 home lots as of last year. About 9,000 of those lots were located in Arizona and Nevada, according to the company’s last annual report.
The recent purchase also reverses a recent trend of large asset sales and planned sales, rather than buys, for the builder, which filed for a prepackaged bankruptcy filing late last year as part of an effort to restructure its debt.
The restructuring saw the builder reduce its debt load by about $180 million while getting an additional $85 million of capital.
Noteholders, led by New York-based hedge fund Luxor Capital Group LP, grabbed a sizable equity stake in the builder following the bankruptcy, which was concluded in late February.
William Lyon Homes subsequently sold a 27-acre former mall site in Northern California to San Francisco-based real estate investor Rockwood Capital LLC for a reported $90 million.
The builder also put its high-profile Newport Beach headquarters up for sale in May, when it announced plans to relocate to a smaller location in the area around John Wayne Airport.
HQ
The company’s longtime headquarters, at 4490 Von Karman Ave., is currently on the market for about $11.2 million.
Specifics of June’s land acquisition, including the seller’s identity and details of the properties, were not disclosed.
The land trading hands appears to be familiar to the builder, and once counted a much higher valuation. A reading of regulatory filings suggests that the land had been previously owned by William Lyon Homes, but was sold off a few years ago amid cost-saving moves by the builder.
The company announced in late 2009 that it was selling 165 acres of land—the same amount and in the same markets as the latest purchase—for $13.6 million.
The book value of the properties at the time was about $84.2 million, according to the company.
“That’s the reality of the housing market,” said Mike Hunter, senior marketing consultant with the Irvine office of land brokerage Land Advisors Organization. “Lots of builders that paid top of the market prices in 2006 and 2007 ended up selling their land and taking write-downs.”
The late 2009 land sale was done to generate cash flow and to reduce debt, according to William Lyon Homes.
Tax Refund
The sale also was expected to help the company generate a tax refund of between $80 million and $95 million, according to regulatory filings.
“The company determined that the best economic value to the company of these lots was to sell them in their current condition as opposed to holding the lots and eventually building and selling homes,” William Lyon Homes said in its 2010 annual report.
In many recent cases, builders selling their land had right-of-first-refusal clauses in their contracts, allowing them the chance to buy back the land once the market recovered, Hunter said.
William Lyon Homes paid $10 million in cash for last month’s purchase, and financed the rest of the deal by issuing 10 million shares of the privately held company’s stock to affiliates of Colony Capital LLC, a Santa Monica-based real estate private equity fund.
Colony Capital had been one of the builder’s largest lenders prior to this year’s restructuring.
