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Buying low and selling high worked out for Starwood Land

The Independence community was part of the real estate crash, but rebounded quickly afterwards.
The Independence community was part of the real estate crash, but rebounded quickly afterwards.

In January 2010, Florida's residential construction market resembled the aftermath of a particularly drunken New Year's Eve party, with failed home building companies littering the landscape like discarded red Solo cups.

Most likely the biggest mess in the pile was TOUSA, a South Florida-based builder with a strong Central Florida presence, that had expanded at the very peak of the market in 2008, only to crash into bankruptcy and then liquidation by 2010.

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Starwood Land, a Florida-based residential real estate investment firm focused on land acquisition, development and financing nationwide, as well as other opportunistic land companies, swooped in for the clean-up.

At the bankruptcy auction that month, Starwood picked up TOUSA's assets, spending $81 million (up from its original $61 million bid) for 5,499 home lots and 36 model homes owned by TOUSA's defunct Engle Homes brand. That averaged out to roughly $14,730 per lot, not including the model homes.

It turned out to be a good buy, said Mike Moser, CEO of Starwood Land, which partners with Starwood Capital Group, a well-known national real estate investor.

"We spent $81 million on that and we made $100 million in profit," he said. Only about 60 or 70 lots remain from the TOUSA purchase, Moser said.

Some of the lots Starwood bought from TOUSA were in Independence in Orlando's Horizon West, which had been the No. 1 selling master plan in Orlando for two years in a row. The last of those lots cleared out in 2014, Moser said.

Starwood is still selling lots and developing in Orlando, as well as other states beyond Florida. A subsidiary recently borrowed $54.7 million from the Bank of the Ozarks, according to Lake County records.

Moser said the cash will be used to develop a few thousand more lots in several states in the next few years.

Starwood is positioned to continue its investments in superior land positions throughout the United States, Moser said.

tburney@growthspotter.com or 407-420 6261

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