Partners with Public-Listed Homebuilders in the U.S. and Launches a new Fund
Singapore: 19 March 2020 – Walton International Group (“Walton”) announced a two-pronged strategy with the single over-arching objective of accelerating exit activity on its existing and new property acquisitions for the benefit of its investors. The strategy addresses two fundamental changes in the U.S. homebuilding and land development industry which have emerged following the market’s recovery from the great recession.
The first major change is the mass departure of specialist land developers who exited the market in 2008 and never returned. The second change is a prolonged contraction in bank financing of land and construction loans. Banks withdrew from this business line in 2008 and are yet to make a significant return.
Partnering with Public Listed National Homebuilders
Going forward, Walton will have its investors’ exit strategy pre-programmed before it acquires predevelopment land properties in the path of growth. This is achieved by executing an “Exit Focused Agreement” with a homebuilder prior to property acquisition allowing them an exclusive period to negotiate the terms of a phased takedown of land. Specifically, this strategy will target properties where homebuilder cash flow from home sales is forecast to commence after 24 months from the acquisition of the land. The homebuilder will collaborate with Walton on the long-term planning objectives of the land and is anticipated to start phased development of the property as soon as the market is deemed ready.
This new strategy will allow the homebuilder to acquire land in phases with the bulk of land payments deferred to the timing of home sales. In return, the homebuilder will take on the entitlement and land development cost. For Walton and its investors, they will see their investment cash flowing over the course of the development.
Mr Bill Doherty, Chief Executive officer of Walton International Group, said: “Walton’s new strategy has been extremely well received by the market as it solves a considerable challenge for homebuilders who need a pipeline of land assets in order to deliver lots to their homebuilding operations. At the same time, it is also providing an opportunity for investors by decreasing risk and uncertainty and expediting exits for their investments in land projects across the U.S.”
Launch of Builder Option Land Development (BOLD) Fund
Having received a positive response to its new strategy from the homebuilding industry Walton is announcing the launch of its first BOLD Fund. The Fund will raise capital from investors globally, with an investment objective of acquiring land for future sale to homebuilders throughout the United States. Specifically, the fund’s mandate is to acquire properties where homebuilders’ cash flow from home sales commences within 6-24 months.
The BOLD Fund offers investors the opportunity to participate in the ongoing growth of the home building market in the U.S. The fund will acquire properties identified by large volume U.S. homebuilders for near term residential development projects through a predetermined exit strategy. The land is then expected to be sold to those same builders in phases with an adjustable takedown schedule and flexible payment options. BOLD Fund investors are anticipated to receive quarterly distributions as homes are built and sold by the builders.
“The BOLD Fund provides investors with the opportunity to invest in real estate assets targeted for near-term development by the largest homebuilders in the United States. The evolution of Walton with this 2-pronged strategy has opened the door to offering new products, like the BOLD Fund, thus, creating new opportunities for investors and homebuilders,” added Mr. Doherty.
Acquisition of 245-Acre Lee Farms Property in Loveland, Colorado
With the new strategy in place, Walton has acquired a 245-acre property from The True Life Companies and the Lee Family located at 4300 Wilson Ave. in Loveland, Colorado. The pre-development land parcel is slated for a single-family residential master planned community of approximately 900 units, offering a variety of sizes and types of homesites.
Located 14 minutes from Fort Collins, Colorado, home to Colorado State University, the Loveland region boasts a strong economy featuring dozens of innovative businesses from tech start-ups to Fortune 500 companies, low unemployment and steady population growth that is driving demand for residential construction.
Concurrent to the purchase of the property, Walton has secured interest from a top public-listed homebuilder with plans to begin development of the land in 2021. Walton has executed an Exit Focused Letter of Intent that affords the builder a right of first refusal for a phased procurement of the property. It is anticipated that the land will be developed in multiple phases, providing distributions to investors as the builder sells the homes.
“Walton’s strategy is especially relevant in view of the current economic uncertainty arising from COVID-19. By allowing homebuilders increased flexibility in securing land positions, they are able to stay focused on their long-term inventory plans and are less distracted by short term market volatility,” commented Mr Doherty.
For over 40 years, Walton has researched, planned and structured pre-development land investments located in the major growth corridors throughout the U.S. and Canada. With the new strategies in place, it has created new opportunities for investors and homebuilders.
About Walton International Group
The Walton Group of Companies is a privately owned, global, real estate investment, land asset management and administration company that has focused on strategically located land in major growth corridors for over 40 years. The company manages and administers US$3.8 billion of real estate assets in North America, on behalf of its investors and business partners. Walton has more than 106,000 acres of land under ownership, management and administration in the United States and Canada. Key entities in the Walton Group of Companies include Walton Global Investments, Walton Global Holdings, Walton International Group and Walton Development and Management.