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Investment firm banking on San Antonio’s housing sector

Posted by: In: Industry Insights 11 Apr 2013 Comments: 0

(San Antonio Business Journal) An influx of new residents, combined with a shortage of homes, has created in San Antonio a housing market that favors those with a precious commodity at their disposal: Land.

Now, an investment firm out of Houston is working to capitalize on that market dynamic.

“There are probably six or seven sites we’re in negotiations on,” says Jim McAlister IV, president and CEO of Rockspring Capital, an investment firm that deals exclusively in land acquisitions. To date, Rockspring manages more than $260 million worth of assets.

Residential sites are not the firm’s sole focus. Last week, for example, Rockspring purchased 7.6 acres in the far West Side master-planned community known as Westover Hills. The site is being marketed for a variety of uses — including office, medical and multifamily developments.

The residential sector is, however, high on Rockspring’s radar — especially in major Texas metros like San Antonio.

“For the next three years at least, the housing market, especially the land market, is going to be very strong,” McAlister says. “Our future for the next several years is set.”

San Antonio, like other Texas metros, has seen a huge influx of new residents over the past five years, McAlister explains.

The new housing stock to meet this demand, though, has been slow to develop.

“(The Texas housing markets) are just now coming out of a huge downturn,” he says. “Over the past five years, there’s been almost no new product.”

Part of the problem for builders has been an ever-dwindling supply of finished lots available for them to buy so they can build new homes.

Rockspring, McAlister says, has the ability to bring those lots to market. The firm’s network of high-net-worth individuals and institutional investors means that the firm has cash on hand to buy large tracts of land at a very competitive price.

Rockspring also has the financial wherewithal to make the high-dollar improvements to make a site development ready — and thus very attractive to the end user.

A recent example of Rockspring’s strategy is a subdivision in New Braunfels known as White Wing. Rockspring purchased the property, a total of 117 lots, in February 2012. At the time, the project was at a veritable standstill — with the original developer in dire financial straits.

Four months after buying the lots, Rockspring sold 46 of them to Scottsdale, Ariz.-based Meritage Homes. About a year later, Meritage purchased the rest of the lots in the community.

McAlister will not divulge the location of the six or seven deals Rockspring is currently eying.

But he does expect to be making some annoucements “very soon.”

“We are buying a whole lot of land right now,” he adds.

To view the San Antonio Business Journal article, click here.

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