Luxury homebuilder Toll Brothers Inc. of Horsham acquired Sienna South, a master planned community, part of Sienna Plantation in Houston, Texas. According to a news release, when the 3,700-acre site is fully built out, Sienna South could generate gross home sales of more than $2.6 billion.
"That is the total arrived at by taking all 6,500 lots [most of which will be sold to other builders] and assuming they sell those homes for an average of $400,000 each," said Frederick N. Cooper, senior vice president of finance, international development and investor relations for Toll Brothers. Those figures are not just revenues to Toll Brothers, he added.
The acquisition is a joint venture with GTIS Partners, a real estate private equity firm headquartered in New York City. The joint venture hired the Johnson Development Corp., developer of Sienna Plantation, to act as master developer.
The purchase price was about $79 million for the South Sienna land, Cooper said.
The joint venture expects to develop about 6,500 single-family home lots which would be sold to local, regional and national homebuilders over the anticipated life of the community. Toll Brothers may acquire up to 1,750 of those lots for its own homebuilding operation over that time period.
The site is fully zoned for up to 10,000 single-family homes, along with 140 acres of retail and commercial use and 63 acres of civic use.
"Houston is a very strong market with a current lot shortage in the best locations," Cooper said. "We have operated there since 2009 and have found the market very appealing. This was a tremendous opportunity to buy the last piece of what has been one of the top 20 master plans in the United States for many years."
Site improvements at Sienna South are slated to start in April, with sales of lots to builders planned in late 2014. Sales to homebuyers should begin in 2015.
The company said it is now building luxury homes in 25 communities throughout Pennsylvania, including Lehigh Crossing in Macungie, Wehill Estates at Upper Saucon Township and The Reserve at Pond Creek in East Stroudsburg.
"At the moment, we are not looking to expand into any new markets," Cooper said. "Our focus is more on expanding our various product lines into the markets in which we already have a presence."
The company is trying to bring its City Living brand into Boston and San Francisco and already builds in New York City, Hoboken-Jersey City, Philadelphia and Washington, D.C., Cooper said.
In 2013, Toll Brothers delivered 458 homes and produced revenues of $268.5 million in Pennsylvania, Cooper said.