One of Nation’s Largest Homebuilders Buys Acreage North of Miami for Affordable Homes

Lennar Corp. is building Arbor Parc in Riviera Beach, Florida.

A Florida real estate firm has identified a strategy of buying and holding land before selling it to national homebuilders across the Sunshine State, a business model that streamlines development and could help fix an affordable housing shortage.

BTI Partners has sold 309 multifamily lots on almost 20 acres in Riviera Beach, Florida, for $19.2 million to Miami-based Lennar Corp., one of the largest homebuilders in the country, according to a statement from BTI.

Lennar bought the land to answer an immediate demand for homes in Riviera Beach, a working-class community about 50 miles north of Fort Lauderdale, Florida,and about 75 miles north of downtown Miami. Some analysts are predicting a recession by the end of 2020, making affordable housing an even more important priority than it is now.

BTI, based in Fort Lauderdale, acquired the land in 2011, near the end of the historic housing bust. It secured government approvals and hired 13th Floor Homes of Miami to market, sell and build the first phase of Arbor Parc in northern Palm Beach County. When complete, the development will have 500 homes and townhomes.

Prices in the development start in the mid-$200,000s, a rarity for new construction in South Florida. Builders say the high price of land and rising construction costs make it difficult to offer new homes below $300,000.

“Since the recession, the nation’s public homebuilders have been pushed to minimize their land inventories as shareholders are increasingly more focused on maximizing near-term cash flow and limiting inventory risks,” BTI Chief Executive Noah Breakstone wrote in a statement to CoStar News.

BTI’s willingness to buy the land and secure government entitlements helps builders improve cash flow by allowing them to acquire tracts only as they are needed for development, Breakstone added.

Builders are wise to limit their land holdings, said Ken Johnson, an economist and real estate professor at Florida Atlantic University in Boca Raton, Florida.

“You are greatly exposed if you are carrying a lot of land, especially as we near the peak of the housing cycle,” he said in an interview.

Buying land on an as-needed basis makes it easier to build homes, which are sorely needed across the country, Johnson noted.

“We didn’t build many homes for almost a decade, but our population kept growing,” he added.

Land development companies like BTI are nothing new, said Anthony Trella, a national homebuilding consultant based in Central Florida. But the large land developers left the business shortly after the savings and loan collapse in the early 1990s, leaving the industry to smaller players, Trella explained.

Local governments are “pushing back” on land entitlements, so getting the approvals is no sure thing, and BTI needs to be careful about buying too much land, according to Trella.

“They have to be smart and disciplined enough to stay in the reality box,” he said. “But they’re probably in a very safe position. There’s no reason to be frightened about Florida.”

In South Florida, few large tracts are left for single-family homes. The region is wedged between the Atlantic Ocean and the Everglades, a unique geography that has the strip north from Miami facing a severe land shortage, particularly in areas near Interstate 95. Most of the new homes getting built are on smaller, infill lots.

Meanwhile, BTI is finding opportunities in other parts of Florida.

In Tampa, on the state’s west coast, the firm acquired a 52-acre waterfront parcel following the Great Recession and has since sold parcels for apartments and townhomes to The Related Group of Miami, Bainbridge Cos. of Wellington, Florida, and Lennar-owned WCI Communities of Bonita Springs, Florida. BTI retained some of the land to build condominiums. The Westshore Marina District, which also includes retail space, will have more than 1,300 new rental and for-sale units, making it one of the largest mixed-use communities under construction in Tampa Bay.

BTI also is acquiring more than 1,400 acres in Orlando, and said it plans to secure zoning rights from local municipalities before selling the land to other builders.

The privately held company’s roots date to the 1950s when Arthur Breakstone, Noah’s father, built single-family homes. It later developed multifamily properties, hotels, luxury homes and condominiums before getting into land investment. The firm said it has acquired $650 million in land totaling 8,000 acres since 2010.

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