Active forum participants know that I follow the San Elijo Hills area (no dump jokes please). We recently went to Richmond American’s sales trailer (no models until summer) where they have had first phase releases for two neighborhoods.
Atherton is the higher-end of the two with larger homes on larger lots with some nice ocean views. The other neighborhood (Luminara) has no view lots.
After our visit, I started to do a little detective work on Richmond American’s land costs. If I’m reading everything correctly, Richmond American paid $23.68 million for the Luminara land (October 2005) and $31.009 million for the Atherton land (December 2005).
There will be 128 homes at Luminara (2,500-2,700 sq ft) on your typical small lots in the 5,500 sq ft range. This works out to $185k per homesite, which doesn’t seem all that unreasonable.
Atherton, on the other hand, will have only 71 homes from 3,400-3,700 sq ft. I don’t know the average size lot but the sales counseler’s book showed a majority were in the 6,500-7,500 sq ft range. There are also some premium lots over 10,000 sq ft. If we do the math, this comes out to over $436k per homesite.
In their first phase release, they have sold two out of seven homes in about a month. Their base asking prices are $800, 845 and 890k for the three floorplans with about $75k tacked on for view lots.
Assuming my detective work is accurate, my question to the pros on this site is the following:
Did Richmond American overpay?
If so, how do they salvage this project in the current environment without taking an enormous bath?
Putting aside the wisdom of buying residential land for development at this time, there are a couple things that come to mind. The seller for both parcels is the same entity, and the sale price for the Atherton land is said to have been negotiated at some point prior to 2004. It’s possible that the saleprices for the two transactions involve some reallocation between the two parcels for some reason.
It’s also possible that they sold with different levels of entitlements – one may have already had a recorded map and the other may have owed some fees and bonds and such.
When looking at these transactions from the outside it’s hard to know exactly what’s going on without interviewing one of the principals to the sale, and both sales were apparently handled in house without the use of outside brokers. So basically, good luck in finding out anything at all.
To make matters just a little more confusing, the parcel that sold in 10/2005 has another sale listed on it from 11/17/2005 for $21,000,000, and I found yet another transcation attributed to this site on 10/05/2005 for $36,000,000. Offhand, I’d say the 161 acres has been split into at least 2 and possibly 3 smaller parcels and it’s possible your numbers on the 10/2005 sale are off. Richmond might be using part of the 12/2005 sale land in with their portion of the 10/2005 sale land to build the larger project.
Or you could possibly have it reversed and they may be building the Luminara project on the $31,000,000 parcel and the Atherton project on the $23,680,000 parcel.
Truth is, I don’t know what the answer is – I’m just throwing a couple random thoughts out.
Thanks. I figured there was more to it than the initial appearance.
As far as mixing up the parcels, the sale of the $31 million parcel is listed as Double Peak Dr., which will be the turnoff from San Elijo Rd. into Atherton. The other parcel is listed as Wild Canyon Road, which happens to run past Luminara.
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