GTIS JV puts another $160m into US homebuilding

Private equity real estate firm GTIS Partners is continuing its partnership with homebuilder Hovnanian Enterprises, the firms said Thursday.

The duo plans to invest $160 million to acquire a portfolio of homebuilding communities in eight US states. This is the partners’ fifth joint venture, with investments now totaling 34 communities and 5,700 sites. For the latest joint venture, GTIS is contributing 75 percent of the capital and Hovnanian will manage the day-to-day operations, according to Thursday’s statement. The first tranche of the joint venture, consisting of eight communities, has closed, and the partners expect revenue from home sales to exceed $1 billion.

“The portfolio represents a diverse mix of geographies, product types and price points, and has a significant concentration of finished and partially-finished lots, with communities in some of the strongest residential sub-markets in the country,” said Robert Vahradian, GTIS’ head of US investments, in Thursday’s statement. These submarkets include Scottsdale, Arizona; San Jose, California; and central New Jersey.

PERE understands that GTIS made its investment with a combination of capital from its GTIS US Residential Strategies Fund II and co-investment capital that it raised for this transaction. The firm held a final close on the vehicle in December on $219 million, according to PERE research.

“This investment underscores our belief that, while the health of the US housing market has improved along with the general economy, a persistent shortage of new home supply remains, and affordability levels should allow for continued strength in the housing market,” said Ed McDowell, a GTIS managing director, in the statement.

GTIS has about $3.3 billion in assets under management, according to its statement Thursday.