$8M buys unfinished Hovnanian retirement hub in Vail for Pulte

Arizona Daily Star
News Elsewhere
07.15.2009

By Josh Brodesky

TUCSON, ARIZONA — For all of $8 million, Pulte Homes has purchased an
unfinished retirement community in Vail, picking up hundreds of home
lots as well as a 14,000 square-foot lodge, two swimming pools, 12
model homes and tennis courts, among other amenities.

Some economists and housing experts have said such fire-sale deals are
a key part of the housing recovery, hinting at a bottom as builders
and investors move back into the market.

Pulte closed on the deal Tuesday with K. Hovnanian Homes, the original
developer of Four Seasons at Rancho del Lago, an active community for
residents age 55 and up.

Hovnanian launched the community in February 2008 ‘ despite the
housing downturn ‘ planning to build about 500 homes with prices
starting in the upper $180,000s. But it only built about 35 homes and
finished about 280 lots. Hovnanian’s stock has been trading around
$2..20 a share.

With the change in ownership, Pulte has renamed the community Del Webb
at Rancho del Lago, although the builder will continue to offer
Hovnanian’s floor plans. Over time, Pulte said it may bring on its own
floor plans.

Although new-home construction is at a veritable standstill, Pulte is
banking on a growing demand for active retirement housing as more and
more baby boomers retire. The recession may slow down that process by
years, but the price of the deal, which was paid in cash, gives Pulte
plenty of time.

"It was a great deal," said Shawn Chlarson, Pulte’s Tucson division
president. "As a location, the Vail submarket is physically
beautiful. There is a lack of active adult competition down the I-10
corridor."

Pulte management could not be specific about pricing other than saying
homes will start in the "mid-100s."

For some time, Pulte had been looking to return to the active
community market in Tucson, relying heavily on its well known Del Webb
brand.

"I think it’s as ideal a vehicle as we could pos d our lifestyle,"
Chlarson said.

Amy McReynolds, vice president of operations for Pulte’s Tucson
division, said Pulte will go about marketing the amenities Hovnanian
had already put in ‘ pools, a massive lodge with a gourmet kitchen ‘
as well as its prime location next to the public Del Lago Golf Club.

"Del Webb builds lifestyle communities," she said. "In Tucson we were
missing the active adult community, and it’s a pretty big profile to
not have in Tucson."

Andy Pedersen, regional director of marketing for K. Hovnanian Homes
of Arizona, said the nation’s sixth-largest builder will "continue to
grow throughout Arizona and carry on the tradition of quality,
leadership and value."

"Though K. Hovnanian does not have any active communities in the
Tucson market, given the acquisition of Four Seasons at Rancho del
Lago, we are committed to providing excellent, hands-on customer
service to our Tucson homeowners."

To Tim Oakes, designated broker for Del Lago Realty, the biggest
selling point for the community is its facilities and amenities, which
he described as "absolutely incredible."

Building has stopped in the area, and prices have dropped to the
$140,000s, he said. But because of those facilities and eventual
growth, "I think it’s still a gold mine," Oakes said. "The facilities
are great."

More and more, developers and investors are purchasing unfinished
developments, which some experts say is a sign the housing market is
hitting a bottom.

"I think a lot of (builders) believe there is going to be potential in
a couple of years," said Jay Q. Butler, real estate studies director
at Arizona State University.

"Pulte, of course, is going to play on the Del Webb name, and, of
course, with the aging baby boomers, they feel this is going to be a
big growth market in the coming years," Butler said.

University of Arizona economist Marshall Vest said deals like Pulte’s
or the recent purchase of the unfinished River Walk townhomes
development in the Foothills are a key step in forming a bottom for
the housing ma ite for risk is returning," he said. "And it’s good
news because private capital is coming in now and buying up these
assets that are really very cheap."

Contact reporter Josh Brodesky at 573-4178 or jbrodesky@azstarnet.com.

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