The Evolution of Land Acquisition and Development Financing
Homebuilders and developers are shifting from the traditional method of purchasing and banking large tracts of land to a "just-in-time" model. Today, land is purchased for immediate or near-term development. This approach presents a unique opportunity as homebuilders and developers look to secure a long-term supply of land. This is where Walton comes in. Working together with top national homebuilders, Walton has developed an acquisition and disposition strategy that serves to provide a pipleline of dedicated land inventory for homebuilders and developers on terms that meet their business objectives.
Fixed Interest Financing
LAD Financing is a fixed interest rate opportunity that offers the potential for an income stream through periodic payments. The financing is borrowed by a Walton entity and used for the purpose of acquiring land identified for sale to a homebuilder or developer. The financing is secured by an equity pledge of the borrower – the entity has no additional debt. Proceeds from the borrower’s sale of the land to the homebuilder or developer is used to repay the financing. Repayments are expected to be made periodically as the builder or developer sells homes or lots and makes payments to the borrower under the property sale agreement.
LAD Financing opportunities are targeted for acquisition of land within growth markets across North America. The Walton borrower acquires pre-identified land and immediately enters into an option agreement to sell the land to a homebuilder or developer, which may be in a phased takedown structure. A down payment is made by the homebuilder or developer at the time the land transfers and the Walton borrower receives deferred payments as lots or homes are sold. The Walton borrower uses the proceeds to make payments on the LAD Financing.