City Ventures Inc. has shown that there are other ways to raise money, even as some fellow Orange County-based homebuilders have opted to join a recent trend of initial public offerings.
The company—one of the most aggressive buyers of land in California since its 2009 formation—has raised nearly $345 million from land sales over the past three months. The total includes last week’s $174.5 million deal with a fellow Newport Beach-based builder, William Lyon Homes.
“We have a tremendous amount of land—this was one way to raise some capital for the future,” said Craig Atkins, chairman of City Ventures.
Atkins said the company still owns or controls about 14,000 home lots in California, following the recent sale of nearly 2,000 lots in separate deals with William Lyon Homes and Miami-based Lennar Corp.
The sale to William Lyon Homes included 540 home lots at eight new-home developments, including two in Orange County.
The land sale, which is set to close in phases over the next few months, is the largest purchase for William Lyon Homes since the last downturn, said President and Chief Operating Officer Matthew Zaist.
William Lyon Homes now owns or controls about 14,300 home lots, including more than 4,200 lots in California.
“This was a unique opportunity for us; it gave us a nice book of land in a number of coastal markets,” said Zaist, whose company went public last year several months after Irvine-based TRI Pointe Homes Inc. and a few months before The New Home Co. of Aliso Viejo.
OC-based companies have accounted for three of the seven IPOs by homebuilders in the U.S. since the start of 2013.
William Lyon Homes raised nearly $250 million in proceeds from its May initial public offering and an additional $100 million through a bond offering last October.
Last week the company announced another $150 million notes offering, the proceeds of which are going to be used in part to fund the City Ventures land deal.
City Ventures filed a registration statement with the Securities and Exchange Commission for its own IPO last June, but it hasn’t moved ahead with the offering.
Atkins said his company is “considering all our options” in terms of raising funds.
“We still have a big appetite for land—this [land sale] was a way to raise capital, and to create a more stable platform” for the company.
St. Regis Sale
The most notable local property William Lyon Homes picked up from City Ventures last week was Grand Monarch, a 37-home project going up next to the St. Regis Monarch Beach Resort in Dana Point.
Homes at the there expected to be priced near $3 million and are slated to start selling later this year.
Zaist said his company hasn’t decided whether to rebrand the Dana Point project or any of the other developments taken over from City Ventures.
Other Southern California sites trading hands include a high-end project in Glendora and more affordable projects in Lakewood, Claremont and Sunland, as well as two sites in Northern California.
Also expected to sell is an undisclosed property in Central OC that is still working its way through the entitlement process, Zaist said.
The sale “gives us [a variety] of price points for homes, from entry level to move-up homes, to [more expensive] homes like in Dana Point,” Zaist said. “It’s got everything.”
The sale continues a trend of well-capitalized public homebuilders snapping up home lots, particularly in California, said Sal Provenza, senior vice president for the Irvine office of brokerage Colliers Inc.
Private companies such as City Ventures “have been fantastic feeders to the public companies” of late, said Provenza, a former executive at Horsham, Pa.-based Toll Brothers Inc. who specializes in land sales.
Public companies “are all in a buying mode,” and land sales allow the private companies to see strong profits without having to invest too much for ground-up development, he said.
Lennar Sale, Too
The deal with William Lyon Homes is the second notable land sale for City Ventures recently Atkins said.
Around the end of 2013, it inked a deal with Lennar to sell nearly 1,400 home lots in the Inland Empire.
That deal was previously undisclosed and sold for nearly $170 million, Atkins said.
The lots sold to Lennar were part of City Ventures’ CV Communities LLC line of business, which focuses on inland areas in the state, where development might be a few years further out than the company’s more coastal properties.
Sites sold to Lennar, which runs much of its homebuilding operations out of Aliso Viejo, include land in French Valley, Jurupa Valley, Menifee, Ontario and Wildomar.
Atkins said his company continues to be on the hunt for land, thanks in part to the two latest sales.
The company has closed 11 deals, totaling 845 units and more than 100 acres, in California since October.
Two of the land purchases are in Santa Ana, Atkins said. They include a site along Euclid Street where single-family homes in the $800,000 range are planned, and a site in the city’s Station District where townhomes in the $400,000 range are planned.
City Ventures has 14 active home construction projects in California, three of which are in OC.
