GTIS Partners and Hovnanian Enterprises have expanded their US homebuilding venture with a $115m (€107m) capital injection, giving the partnership $1bn in equity.
Global real estate investment firm GTIS Partners is providing 70% of the capital alongside a 30% contribution from NYSE-listed US homebuilder Hovnanian towards new projects that will have total build-out costs of around $800m.
The fresh capital will enable the pair to expand their partnership to develop, construct and sell homes in a new joint venture of eight additional for-sale homebuilding communities comprising 1,392 homes located in New Jersey, Florida, Delaware, and South Carolina.
Hovnanian will manage the day-to-day operations of the venture.
The partnership has already built a presence in 70 homebuilding communities in various joint ventures.
Tom Shapiro, founder, president and CIO GTIS Partners, said: “We are very pleased to announce a further expansion of our existing relationship with Hovnanian.”
With this transaction, Shapiro said the pair have a partnership totalling $1bn in equity in 15 joint ventures in high-growth markets in the US, representing approximately $6bn in total project costs across 12,600 homebuilding units.
Ara Hovnanian, chairman of the board of directors, president and CEO of Hovnanian Enterprises, said: “This addition marks the expansion to over a decade’s worth of successful joint venture partnerships and a strong working relationship between our two firms across multiple business cycles.
“GTIS’s deep industry expertise and homebuilding investment experience has made them ideal institutional partners to collaborate with to grow our homebuilding portfolio.”
Ed McDowell, partner and head of US acquisitions for GTIS Partners, said: “The addition to the portfolio represents a mix of product types, price points, and a unique geographic diversity across eight communities in four states, many of which are follow-on investments to communities we are already invested in with Hovnanian.
“This dynamic, combined with the advanced development stage of several of the communities within the portfolio – many of which are already selling and delivering homes – provides excellent visibility into current home prices, absorption, buyer demand, and construction and development costs, and reduces the risks typically associated with development to generate strong risk-adjusted return for both parties.”
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