9/9/2019 Sumitomo Corners Key Carolinas Lot Pipeline with New Developer Deal | Builder Magazine

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Posted on: August 26, 2018 0 Like

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SUMITOMO CORNERS KEY CAROLINAS LOT PIPELINE WITH NEWDEVELOPER DEAL60% purchase of Mark III properties secures primacy for Dan Ryan Builders, and marries with CrescentCommunities deal on broader builder-developer master plan.

By John McManus

Taking a long view of growth, revenue diversification, and business expectations--not only for its Dan Ryan Builders

MidAtlantic power builder, but as a gate-keeper through which other builders and multifamily developers who want access

to finished, developed lots in the red-hot western Carolinas market must pass--Sumitomo Forestry America acquired 60%

ownership of a strategically critical South Carolina beachhead, land developer Mark III Properties, based in Spartanburg.

The deal, finalized in mid-August, follows closely on the heels of Sumitomo's $370 million (plus payment of $380 million in

debt) acquisition of the much larger, multi-state residential and mixed-use land development assets of Crescent

Communities, which also does business in South Carolina's Spartanburg-Greenville-Anderson market. This tri-city area,

some 75 miles west of Charlotte, N.C. on I-85, is considered among many big builders--especially ones who're intent on

tapping into a growing vein of entry-level and lower-priced tier home buyers--to be a critical pin on their operational maps.

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9/9/2019 Sumitomo Corners Key Carolinas Lot Pipeline with New Developer Deal | Builder Magazine

https://www.builderonline.com/builder-100/sumitomo-corners-key-carolinas-lot-pipeline-with-new-developer-deal_o 2/4

On the face of it, the transaction achieves a "win-win" outcome for sellers and buyers. Sellers get immediate access to big-

time capital from Sumitomo, who's got an aggressive strategy to be a 5,000 a year, top 20 home building portfolio of

operators in the U.S., and an opportunity to pay down debt and "take chips off the table," as risk intensifies in an aging

recovery. At the same time, the buyers--Sumitomo--get a compelling foothold for both single- and multifamily development

in a market viewed by many in real estate to be an almost sure bet for land demand, even as the housing market enters a

narrower fairway of opportunity.

Especially in a stretch of the housing cycle expected to focus heavily on price, operational excellence, fundamental demand,

and a structurally resilient regional economy, lots and land in the right place at the right timing is a non-negotiable for

builders who want access to an entry-level marketplace that has shown no visible signs of slowing down despite murkier

optics on the geopolitical, global trade, and national political stage. By dint of sheer economic growth, demand among

lower-end households for homeownership options looks to be only gathering strength.

All of which hold true in the mid-Atlantic's Carolinas marketplaces, where it's still possible to build both affordably and

profitably providing an operator can execute at a high-level of velocity and rhythm--keeping trades, lot inventory take-

downs, construction cycles, costs, and procurement flows smoothed and mistake-free.

Mark III Properties, a two-generation, family-run residential single- ,

multifamily, and light commercial developer in Spartanburg, has

distinguished itself in its 44-plus years as a land developer as a trusted-

partner for both land sellers and builder buyers. Mark III principal and

founder John Beeson, whose son Jay and daughter Laura [Beeson Henthorn]

serve respectively as vp of Operations and vp of Administration at the

company, worked with San Francisco-based Builder Advisor Group on the

deal.

According to a press statement, builders and multifamily developers in the

Tri-City area get from 25% to 30% of their lots and land tracts in the markets from Mark III.

"At least a quarter of all new homes in the GSA area are built on Mark III lots. Last year the company sold over 1100

[1,153] lots to top tier local, regional, and national home builders with over $50 million [$57 million] in sales. They expect

continued growth and production this year. Spanning various stages of development from raw land under contract to

completed neighborhoods with only a few lots remaining, Mark III has nearly 80 independent projects currently on its

books."

On a more macro level, the broader builder-developer relationship and business model may be evolving from a longstanding

boom-and-bust, grow and retrench cyclical template. Instead, a more resilient, product-and-service-development-like,

vertical construction strategic platform might offload and relocate costs and waste associated with cyclical spikes and turns

from builders' operations and balance sheets, especially as they learn to make better money buying land on almost a retail

level, but for nearly wholesale price discounts, like NVR.

D.R. Horton, with its Forestar venture, and North American Sekisui House, which has also acquired U.S. home builders,

and Lennar, with its Five Point Communities development entity, seem to be mapping to a cycle-resilient, land-light

operational strategy, while securing first-dibs access to developed lots where economics and demand is strong.

This strategy not only secures a visible pipeline of developed and develop-able homesites, but it can also work to box out

competitors, and make a premium in profitability on the sale of such lots to companies who run short of them in still-torrid

housing markets.

For Sumitomo and Mark III, a third synergistic and logical opportunity area lies in a multi-spoked connection--today and in

the future--among those two entities and two other Sumitomo franchises, the Crescent Communities empire and Dan Ryan

Builders, which is taking on responsibility and strategy for Crescent's Fielding Homes unit, which has been a player since

2016 in the Charlotte, N.C. market.

Sumitomo Forestry North America execs celebrate with principals ofMark III, John Beeson, Laura Beeson Henthorn, and Jay Beeson [2ndfrom right].

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9/9/2019 Sumitomo Corners Key Carolinas Lot Pipeline with New Developer Deal | Builder Magazine

https://www.builderonline.com/builder-100/sumitomo-corners-key-carolinas-lot-pipeline-with-new-developer-deal_o 3/4

"We've been in the process of doing a deal with two sellers for 750 lots in the

Boiling Springs market, and this infusion and Sumitomo's support--with

both the builders demand and the capital--are going to enable us to make

this deal work," says Laura Beeson Henthorn. "We're really excited about

the possibilities, because our market is red hot and not stopping."

More about SumitomoFind products, contact information and articles about Sumitomo

JOHN MCMANUS

John McManus is an award-winning editorial and digital content director for the Residential Group at Hanley Wood in Washington, DC. In

addition to the Builder digital, print, and in-person editorial and programming portfolio, his accountability for the group includes strategic

content direction for Affordable Housing Finance, Aquatics International, Big Builder, Custom Home, the Journal of Light Construction, Multifamily Executive, Pool & Spa News,

Professional Deck Builder, ProSales, Remodeling, Replacement Contractor, and Tools of the Trade.

ABOUT THE AUTHOR

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Subject:

Developers Development Lots Land Acquisition Land Housing Data Housing Trends

Construction Trends Business and Management

Organization:

Dan Ryan Builders Sumitomo Forestry Group Sumitomo Crescent Communities

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