US $27M EXIT OFFER FROM U.S. NATIONAL HOMEBUILDER
On July 4th 2019, landowners voted to accept a US$27M exit offer from one of the largest homebuilders in the United States. The purchaser has executed an option agreement whereby the property will be acquired in a series of phased takedowns, with landowners projected to receive US$27 million in distributions over nine years. The first distribution is expected in 2020.
According to the terms of the option agreement the purchaser will obtain final approvals and construct onsite and offsite infrastructure necessary for the 1,007 acre mixed use development located adjacent to Plant City in Florida.
CREATING INNOVATIVE SOLUTIONS FOR OUR STAKEHOLDERS
The Varrea exit represents a significant step in Walton’s collaboration with one of the largest U.S. homebuilders. We believe this option-to-purchase exit structure benefits our investors by delivering the clarity of a defined timeline and revenue stream. In return, the purchaser benefits from securing a stable supply of land in a large master planned community. Landowner and purchaser interests are aligned through the terms of the option agreement which require that the purchaser funds significant infrastructure costs up front, thereby ensuring that they continue the development to completion in order to recoup their investment.
This exit strategy reflects a broader shift in the homebuilding industry towards just-in-time inventory, with homebuilders and developers of all sizes increasingly seeking to reduce the pressure of land inventory on their balance sheets. By securing land inventory through option agreements costs can be better aligned with revenues, thereby enhancing operational efficiency and freeing up capital to invest in the costly up-front infrastructure required to kick off the early phases of development in a large master planned communities.
At present, the U.S. housing market enjoys solid fundamentals with healthy population growth, employment growth, steady building permit issuance and strong builder confidence. Nationwide, millennials are driving housing demand as more first-time buyers enter the market. With demand for development-ready land forecast to grow rapidly over the coming years, Walton expects to play an increasingly important role in the U.S. homebuilding industry.
The Walton Group of Companies is one of North America’s leading real estate investment and asset management groups, focusing on the research, acquisition, planning, management and administration of raw land strategically located in growth corridors across the United States and Canada. Assets under management or administration exceed USD 3.8 Billion and comprise over 106,000 acres of land in 22 markets in North America.
