Värde Partners Invests $250 Million in U.S. Residential Real Estate Developments | Business
MINNEAPOLIS & NEW YORK – (BUSINESS WIRE) – Feb.10, 2021–
Värde Partners, a leading global alternative investment firm, announced today that it has raised more than $ 250 million in capital to purchase and finance single family home development in three transactions in the United States
“The US real estate market represents a significant investment opportunity for Värde. The compelling momentum of supply demand is driven by low interest rates, demographic trends and worldly changes accelerated by Covid-19,” said Brian Schmidt, partner at Värde. “These deals demonstrate the speed, scope and flexibility with which our platform can invest across the capital structure to deliver appropriate funding solutions as traditional lenders continue to decline.”
The transactions announced today include:
- A $ 100 million land bank with Dream Finders Homes (DFH), a leading construction company based in Jacksonville, Florida. The capital will be used to acquire properties in Florida and Colorado, with a focus on Jacksonville, Orlando and Denver, which DFH intends to develop into residential lots. After first investing in DFH in January 2019, the company is expanding Värde’s ongoing partnership with the company, working together to develop high quality, affordable homes in attractive communities.
- The acquisition of Verde River, an Active Adult Resort Planned Community (MPC) in Scottsdale, Arizona, with more than 55 homes and an agreement with Shea Homes, one of the country’s leading private developers, to further develop and expand the Project. The community will have 1,210 homes and is already well established with over 600 homes sold.
- The acquisition of Sunfield, a late-stage MPC based in Austin, Texas, and the establishment of a joint venture with IHP Capital Partners to manage the project. The community is located in one of Austin’s fastest growing suburbs and is nearly halfway through. In a market with high demand for more affordable homes, 2,770 of 6,550 lots remain.
Brendan Bosman, Managing Director of Värde, added: “We have extensive experience in housing-related investments and welcome the opportunity to deepen existing relationships and start new businesses as we expand our presence in the US housing market. MPCs in particular have maintained strong demand from shoppers looking for attractive lifestyle communities that offer plenty of freedom. “
Significant opportunity in the US housing market
Värde believes there are significant opportunities in certain segments to outperform the broader U.S. housing market, which entered the pandemic due to a relatively strong position. Household formation was in line with new construction, there were record-low inventories and vacancy rates, relatively cheap mortgages, appropriately controlled credit, good affordability, healthy home equity and a positive price outlook.
The uniqueness of the Covid-19 disruption then meant that supply and demand factors had a completely different effect than a “typical” downturn. The immediate effect has been to reduce supply and drive demand, as home buyers looking for more space have accelerated their decision to buy a single family home, which helped prop up prices.
Government policy has also played a very important role in providing short-term stability to the market and preventing extreme scenarios that could be destabilizing. In particular, through incentives, generous unemployment benefits and leniency policies, government policies have prevented the traditional translation of severe economic damage and high unemployment into property prices.
As the market gradually wears itself off from this support, Värde expects a far more nuanced picture caused by the different effects of Covid-19 on sectors, regions and age groups. Worldly trends, accelerated by the pandemic, including the desire for more suburban housing, and demographic trends such as the later formation of households for millennials and a large baby boomer population, will produce clear winners and losers.
Given the high level of uncertainty surrounding the forward environment, the company remains focused on assets that should perform well in all scenarios. Assets that provide an inflation-protected income stream and have strong basic demand, such as active housing projects in desirable locations, offer the most attractive opportunity.
Strong background in US residential construction
Värde has more than 25 years of real estate investment experience. The company has made significant equity and credit investments in residential development and home construction in recent history, with an emphasis on MPCs. Previous investments in MPCs included stakes in Daybreak in South Jordan, UT (SLC Metro), where 20,000 residential units and 10 million square feet of commercial real estate will be built, and Windsong Ranch in Prosper, TX (Dallas Metro), where nearly 3,000 residential units and 2 million will be built Square meters of commercial property are being built. These MPCs outperformed in 2020 with home sales increasing 40-70% compared to 2019.
Värde Partners is a leading global alternative investment firm with roots in credit and distressed. Founded in 1993, the company has invested $ 75 billion since its inception and manages more than $ 14 billion on behalf of a global investor base. The company’s investments include corporate and traded loans, real estate and mortgages, private equity and direct loans. Värde employs more than 300 people worldwide with offices in Minneapolis, New York, London, Singapore and other cities in Asia and Europe. Further information can be found at www.Värde.com.
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KEYWORD: MINNESOTA NEW YORK UNITED STATES NORTH AMERICA
KEYWORD IN THE INDUSTRY: REIT FINANCE PROFESSIONAL SERVICES RESIDENTIAL BUILDINGS & REAL ESTATE & REAL ESTATE
Copyright Business Wire 2021.
PUB: 02/10/2021 12:00 p.m. / DISC: 02/10/2021 12:01 p.m.
Copyright Business Wire 2021.