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GoldenTree closes first US deal in two years

The firm has joined forces with US homebuilder Hovnanian to buy and develop for-sale homes in Chicago and Palm Beach County. GoldenTree invested 80% of the all-equity deal, no financial details were disclosed.

GoldenTree InSite Partners has formed a joint venture with US homebuilder Hovnanian Enterprises to buy and develop residential housing in Chicago and Palm Beach County – it’s first US deal for almost two years.

The New York-based private equity real estate firm invested 80 percent of the equity capital for the all-cash deal. The JV will buy lots previously owned by another Hovnanian partnership. No financial details were disclosed and a spokesman for GoldenTree declined to comment further.

The JV plans to “design, sell and deliver homes” on the lots, which are located across 11 areas of greater Chicago and Palm Beach County, Florida. Hovnanian will manage operation, according to a statement, and “if certain financial targets are met, Hovnanian will receive a promoted share of the cash returns from the venture”.

The deal will be leveraged with non-recourse debt in the future if financing becomes available.

Tom Shapiro, president of GoldenTree, said: “We have avoided making any US real estate
investments for over two years given our view of the markets and the lack of interesting opportunities.” He said the for-sale industry offered “tremendous long-term potential”, and expected GoldenTree to close additional deals with Hovnanian.

Ara Hovnanian, president and chief executive officer of Hovnanian, said the deal allowed the homebuilder to take advantage of “attractive land opportunities with limited capital investment, thereby preserving our cash position, and, at the same time, afford the potential for enhanced returns.”