Land bankers on the prowl

Remember the land bankers?

Those were the investors who bought land in Lee and Collier counties during the boom and carried the associated costs until they flipped it to homebuilders for a profit.

They usually worked in partnership with homebuilders who didn't want to carry big land positions on their balance sheets.

Ross McIntosh, a longtime land broker in Naples, says he's seen land bankers reappear in the area. He says it's a sign that homebuilders are scouting sites for future residential development, though that could still be far off into the future unless the economy sharpley improves.

McIntosh, speaking to a group of real estate investors at the Urban Land Institute in Bonita Springs recently, cited two recent deals as examples. These included the acquisition by Ronto Group and Angelo, Gordon & Co. of the 1,115-acre TwinEagles community in Naples for $11 million and Kolter Land Partners' purchase of 63 lots in the Sandoval development in Cape Coral. The Bonita Bay Group was the seller in both these transactions.

“We can expect to see more of these deals if current ones are successful,” says McIntosh.

But McIntosh points out that success isn't a sure thing for these groups. Previous land-bank groups such as Metro Development and Brookwood Financial Partners bought too early in the bust and have since exited the market, McIntosh says.

The new generation of land bankers is likely to be composed of local investors who are willing to hold for longer periods of time. “They're not opportunistic, fast investors,” McIntosh says.

For now, it's hard to be optimistic about new-home sales because of the massive number of foreclosures. “There's no real evidence of a recovery yet and I can't perceive of a stimulus to change that yet,” McIntosh says. “Nobody's expecting a significant rebound.”

Some builders are trying to keep prices from falling further. “Lennar is buying foreclosures in their communities to prop up the markets,” McIntosh says.

However, some builders are moving ahead with land acquisition and development. Naples-based Stock Development has been buying lots from banks, Toll Brothers acquired land in Collier County and Mountain Real Estate Capital with GL Homes of Florida plan to start a residential-development project in Collier County. “Somebody is blasting residential lakes,” says McIntosh.

But besides reluctant homebuyers, there are other challenges for land bankers and homebuilders. These include still-high “impact-fee” taxes on new construction, especially in Collier County, and the lack of financing.

And a half dozen companies have sprung up to rehabilitate thousands of recently built foreclosed homes. “Pat Logue and his son have gone into that business,” McIntosh says, referring to the founder of First Home Builders who sold Lee County's largest homebuilder at the peak of the market to K. Hovnanian Homes in 2005. “The homebuilding industry can expect to see competition for years to come,” McIntosh says.