- Walton International Group’s Strategic Relationships with Top U.S. Homebuilders Set to Reap Rewards
SINGAPORE - Media OutReach - 3 August 2020 - Covid-19 is having a profound impact on the
homebuying decisions of many Americans, as witnessed by the rapid recovery of
the U.S. housing market in the past quarter. Walton is uniquely positioned to
capitalise on current trends as a result of its relationships with large U.S. homebuilders
and the flexibility of the land inventory platform it offers.
Before Covid-19 the
migration of millennial and other homebuyers to more spacious, affordable communities
in the suburbs was already underway. Now, the combination of cabin fever from
prolonged lockdown, new acceptance of work from home and historically low
interest rates is turbocharging what some real estate analysts are coining "The
Great American Move".
In June 2020, the
U.S. Census bureau reported the highest level of single-family detached home
sales since July 2007 and the National Association of Home Builders/Wells Fargo
Housing Market Index saw its largest-ever monthly increase on record. Key metrics such as sales orders and buyer
traffic mirror a mix of increasing mortgage applications and low interest
rates. In fact, some homebuilders say
they have never seen so many first-time buyers as in May and June 2020.
The financial impact
of Covid-19 seems to be relatively limited in the suburbs where most of the new
homes are being built. Additionally many of the highest growth housing markets
in the southern states such as Texas, Arizona, Georgia and Florida are set to
benefit from a wave of onshoring as U.S. owned manufacturing businesses plan to
relocate or expand factories in the U.S. in the near future. Recent examples
are commitments by the chipmaker TSMC to Phoenix, Arizona and the carmaker
Tesla to Austin, Texas which are set to bring thousands of jobs that will buoy local
economies and add to demand for new housing in their suburbs.
This will require a
quick response from homebuilders to boost limited supply. Many large
U.S. homebuilders are already reporting historically high backlogs of homes
under contract so maintaining a stable supply of land inventory will be one of
their foremost challenges. Under such circumstances, the value proposition
offered by Walton's land platform is more relevant than ever. Walton offers
homebuilders flexible land acquisition structures whereby the homebuilder is
able to acquire land in phases with the bulk of land payments deferred until
the time that homes are sold. In return,
the homebuilder takes on entitlement and land development costs. With this investment structure, Walton and its
investors benefit from cashflow over the course of the development.
"Our collaboration with major
U.S. homebuilders involves Walton buying and 'banking' the land. The
homebuilders then manage the zoning, development, homebuilding and sales to
home buyers." said Bill Doherty, CEO, Walton Group of Companies. Homebuilders
are asking us to buy near term development assets to enable them to maintain
Walton's shift in strategy was underway well before Covid-19. Given its relationship with key players in
the industry and understanding of market trends, Walton had been pivoting its
strategy away from longer term landholdings to high volume, faster turnover of
land inventory that meets homebuilders' immediate development requirements.
"Under this structure, it creates new opportunities for investors
looking for a balance between risk and yield.
It offers investors exposure to a hard asset in the U.S. coupled with
the fact it is also tied to large homebuilders with strong balance sheets. This appeals particularly to our global
investor base," added Mr. Doherty.
The response of the
homebuilding industry has been overwhelmingly positive. As a result, Walton has
also been able to enhance its traditional investor offering -- direct ownership
in pre-development land -- and give it more of an exit focus. With this strategy
Walton identifies land for a pre-determined homebuilder's medium-term
development pipeline, typically targeting properties where development can
begin within 24 to 36 months. At the time of acquisition Walton enters into an exit-focused
agreement with the builder offering an exclusive right to purchase the land in
the future; the homebuilder benefits from being involved in the land planning
process at an earlier stage. Ultimately homebuilders are expected to acquire
the property in a phased takedown, thereby generating cash flow for investors.
entered into an option agreement to sell 217 homesites to D.R. Horton in the
Escondida Pointe community. The option
agreement was structured as a phased takedown with quarterly lot closings. As of June 2020, 100% of the residential lots
have been sold. Escondida Pointe is
located at 53-954 Shady Lane, Coachella, CA. Coachella is 28 miles east of Palm
For over 40 years,
Walton has researched, planned and structured pre-development land investments
located in major growth corridors throughout the U.S. and Canada. Through innovative, well-researched
strategies, it has created new opportunities for both investors and
Walton is a
privately owned, leading global real estate investment, land asset management
and administration company that has focused on strategically located land in
major growth corridors for 40-plus years. The company manages and administers
US$3.39 billion of real estate assets in North America, on behalf of its
investors and business partners. Walton has more than 104,000 acres of land
under ownership, management and administration in the United States and Canada.
For more information on Walton, its entities and the company's portfolio of
assets, visit Walton.com.