UNITED STATES - Newland Communities has made another investment in a residential land for a partnership with the California Public Employees Retirement System.
It paid $51m (€32.1m) for 3,000 acres in the Estrella master planned community in Goodyear, Arizona near Phoenix.
Derek Thomas is the chief investment officer for Newland. He said, “We think we got a very attractive price for this land. We paid around $17,000 an acre. At the top of the market, residential land prices were $60,000 to $65,000 per acre.”
Newland believes that the Phoenix residential market has long-term potential. Thomas said, “We don’t think the current situation is going to be permanent. The market will come back through as more jobs and population growth comes back into the region.”
Newland paid all cash for the investment. The equity for this purchase came from an investment fund that was created in 2006 with CalPERS. It will not be affected by the recent financial troubles of another residential land investments made by the pension fund in southern California.
Estrella is a so-called ‘master planned’ community located 17 miles from downtown Phoenix. Because of their sheer size, master-planned Communities incorporate extensive recreational amenities. There will be a total of 50,000 homes built there over the next 25 years. The project will target all segments of the housing market except for the high-end portion. Amenities include a golf course, boating and fishing, hiking trails and basketball, volleyball and tennis courts.
Newland has a separate account relationship with CalPERS. The real estate manager contributes 5% to 10% of the capital to the separate account. It has two more development options at Estrella but these are unlikely to go ahead for another year or two.
The real estate manager has approval from CalPERS to invest in residential land in a variety of markets around the US including the Pacific Northwest, California, Nevada, Arizona, Texas, Florida, Georgia, North and South Carolina and Virginia/Washington, D.C.
