27-propertyportfolio

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Centex placed a $528-million book value on the properties,assessing its take-home pay would be $455 million due to ananticipated tax refund of $294 million. Few details about the dealsurfaced during Centex's conference call. But, Chris Mahowald,managing partner of Dallas-based RSF Partners Inc., filled in thegaps for the most part.

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The 8,500 lots, in various development stages, are situated inArizona, California, Delaware, Florida, Georgia, Illinois,Maryland, Minnesota, Nevada, Texas and Virginia. The portfolioincludes Plant 51, a see-through 265-unit condo and loft project at734 The Alameda in San Jose, CA and the rest is land earmarked forattached single-family townhouses and detached traditionalhouses.

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"We've had a lot of calls from people especially interested inbuying some of these projects," Mahowald tells GlobeSt.com. "It allcomes down to price. If the price is right, we'll do it." And ifall is held, he says build-outs will range from three to 10 yearsdepending on project and location. He says the JV is prepared topump more than $200 million into readying the lots for developmentand resale.

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Mahowald says he bought a number of Centex lots in the past,knew an auction process was starting in early January and contactedSan Francisco-based Farallon Capital Management LLC about teaming.Farallon in turn asked South Norwalk, CT-based Greenfield PartnersLLC if it wanted to join, setting up a funding vehicle for anall-cash close and partners in each region for pieces of theportfolio.

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Dallas-based Centex didn't return telephone calls by deadline tocomment on the deal. Centex has a 5% interest in the joint ventureand options to 350 lots, but there are indications that it could beputting homes on far more than that. Mahowald wouldn't confirm nordeny that Centex will be one of the homebuilders for the JV'sdeveloped lots.

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Mahowald says it's unlikely the JV will do any bricks-and-mortardevelopment, but he's not ruling it out or the possibility ofadding a development partner. "We're going to look at everything,"he says, "but this is a lot development investment not necessarilya homebuilding investment."

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The RSF-Farallon-Greenfield partnership's role will be tooversee land development. The portfolio consists of raw acreage,partially finished and finished lots. Centex didn't exit anymarkets with the sale, but roughly 50% of the portfolio is situatedin California and Nevada. Plant 51 is a historic Del Monte packingfactory-warehouse structure built in 1913 in Downtown San Jose.

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Goldman Sachs & Co. and JP Morgan Securities Inc. ran theauction for Centex. The deal resulted in a 10% reduction inCentex's owned lots and eliminated nearly $265 million of futuredevelopment costs related to the properties. Centex still ownsroughly 80,000 lots in the US.

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Centex has been selling divisions for the past year. One of thefirst to go was its construction group to UK-based Balfour Beattyplc. for $362million in February 2007. In tandem with the land sale, italso sold a pest services division. During yesterday's call withanalysts, Centex's executive team made it clear that the goal is topare back its land positions. "We are taking decisive action tomake sure Centex emerges from this cycle in a positive cashposition," says Centex chairman and CEO Timothy R. Eller.

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