Borelli Investment Company - 50 years of Commerical Property Experience - Buying and Selling Land

HIGHLIGHTS

Two parcels of unentitled land-one with a very short escrow
Significant entitlement work was required, due to wetlands location and annexation
KB Home's business model discourages the purchase of unentitled land
Borelli Investment Company brought in a short-term, joint venture partner under tight time constraints, allowing purchase of both parcels to proceed
Master-planned, $850-million community will offer 1,700 homes when complete

In 2004, KB Home optioned a 350-acre parcel of land in Oakley known as the Lesher property, to construct approximately 1,700 homes. The escrow gave KB Home control over the land for an extended period of time to enable the company to work through a lengthy entitlement process with local agencies.

While this process was proceeding, a second piece of land became available in Oakley, which presented KB Home and Borelli Investment Company-its broker in the land transaction-with an attractive opportunity, as well as a number of obstacles.

The second parcel, known as Dal Porto, was approximately the same size as and located adjacent to the Lesher property. Together, Lesher and Dal Porto provided KB Home the opportunity to create a master-planned community with twice the number of homes, which would more efficiently allocate community resources such as schools, parks, and other services.

The Dal Porto property was also available at a very attractive price. The challenge was it required a much shorter escrow that wouldn't permit KB Home to work completely through the entitlement process before closing. KB Home's business model strongly discourages the purchase of property that has not yet been fully entitled for a particular development. How could KB Home complete the transaction?

Borelli Investment Company had a solution. It would find a land development joint-venture partner willing to make a short-term investment in the Dal Porto parcel to close the escrow and move forward.

After the close, the entitlement process on both parcels could proceed at a normal pace. The combined property is located in and around some natural wetlands, requiring detailed environmental studies to preserve and protect the native species. In addition, the property is being annexed to the city of Oakley, and this, too, will require time to complete.

It is much more efficient and cost-effective to obtain entitlements on an entire, master-planned community than on separate parcels of land-because community services don't always follow property lines.

Because Borelli Investment Company was able to find a willing joint-venture partner in a matter of weeks, KB Home could control the whole piece of land and proceed with its plans to develop the $850-million community, which will ultimately provide single-family homes for approximately 1,700 families.