Case Studies

All photos and tract maps shown are of properties currently or formerly owned by The Shopoff Group Limited Partnerships.

Uptown Newport - 1,244 Multi-Family Units - Newport Beach, California

Project Description:
The Uptown Newport project will include redevelopment of an existing 25-acre light industrial property into a high-density mixed use residential project. Up to 1,244 residential units, 11,500 square feet of retail, and 2 acres of park space are planned as part of the project. Residential product types planned for Uptown Newport will include apartments and condominiums with a mix of townhomes, mid-rise and high-rise buildings.

The Uptown Newport property was originally developed as part of the Koll Center Newport, and has been used for manufacturing telecommunications equipment and computer chips since the 1970’s. The property currently includes two industrial buildings that are leased, with Conexant Systems, Inc. and TowerJazz as the primary tenants. Based on 2011 operating results, net operating income (NOI) generated a yield in excess of 9% for the year.

Location:
Uptown Newport consists of 25 acres of developed land located in the City of Newport Beach on the north side of Jamboree Road at Fairchild Road, just east of the intersection of Jamboree Road and MacArthur Boulevard. The property’s unsurpassed location in the heart of the Jamboree Road corridor in Newport Beach makes Uptown Newport ideal for redevelopment into high density mixed use residential development.

Acquisition Summary:
Shopoff Land Fund, in a partnership with DRA Advisors, a New York based private equity firm, purchased the property from Conexant Systems, Inc. for $23.5 million in December 2010, which equates to $940,000 per acre. We were successful in negotiating an extended escrow that enabled us to resolve several key issues during due diligence and secure entitlements that allocate 1,244 residential units to the property prior to closing. Pre-acquisition due diligence efforts consisted of the following milestones:

• Assessed the environmental conditions on the site and negotiated an Environmental Management Agreement with the seller to define future cleanup responsibilities.
• Successfully negotiated an environmental insurance policy with $25 million in coverage.
• Renegotiated leases with TowerJazz, a semiconductor computer chip manufacturer, with annual rents of $2.3 million.
• Entered into a new lease with Conexant (seller) for a lease back of a portion of the space with annual rents of over $700,000.
• Sought and received unanimous approval from the City of Newport Beach City Council for an Integrated Conceptual Development Plan (ICDP) for 1,244 residential units and 11,500 square feet of neighborhood retail.
• Evaluated phasing considerations and prepared preliminary development plans for developing the site into a high-density mixed use residential village.

Business Plan:
The business plan for Uptown Newport is to complete the entitlements that will allow for development of the site into a high density mixed use residential village, and sell the property as-is with the entitlements. The entitlements will include site-specific zoning through a planned community development plan and design guidelines that will serve as the governing regulations for future development. In addition, we are processing a development agreement, environmental impact report, and a tentative tract map as part of the entitlements. We anticipate the entitlement process to be completed in late 2013. With current apartment vacancies averaging 4.9% and annual rent growth projections in excess of 5% (PPR Portal Coastal County Submarket Report, February, 2012), and a lack of inventory to fill growing demand, apartment developers are actively seeking sites in Orange County to develop. Current market conditions are extremely favorable for a sale to an apartment developer within 12 months of completing the entitlements.

Investing in The Shopoff Group limited partnerships involves a high degree of risk, including the possible complete loss of your investment. In addition to being an illiquid investment with an uncertain liquidity date, these investments may have other risks. The past performance of any of The Shopoff Group's Limited Partnerships is no guarantee of future results. View Risk Factors.

Springbrook and Spring Mountain Ranch

In developing Spring Mountain Ranch and Springbrook Estates, The Shopoff Group created what is destined to become one of Riverside County’s premier master-planned communities. Together, these two adjoining projects include over 2,100 homes and associated amenities. Although acquired at different times and processed separately, they ultimately required complementary planning efforts.

Originally, Spring Mountain Ranch was to be a simple single-family residential lot subdivision, without any appreciable amenities, situated on roughly 435 acres of citrus groves acquired from the LVW Brown Estate. Farmed for almost a century, these citrus groves were some of the first put into production by Sunkist.

As part of the approval process, we worked diligently with neighborhood groups, the environmental community, neighboring cities, and state and federal regulatory agencies to engineer a community that would meet or exceed all of their expectations. Among the first approvals received were a Specific Plan, six Tentative Tract Maps, an Environmental Impact Report, a zone change and a General Plan Amendment. That accomplished, we were well on our way to setting the standard for excellence in the area’s first move-up master-planned community.

We faced one additional challenge: obtain sanitary sewage treatment service for the development. Through expert and persistent technical studies and political negotiations, we secured a commitment from the city of Riverside to grant us sufficient capacity in their wastewater treatment facility.

Prior to obtaining all approvals for Spring Mountain Ranch, another group of grove owners approached us about purchasing their citrus properties as well. After discussing development alternatives for the surrounding Highgrove community and other areas with Riverside County Supervisors and administrators, we determined that there was a need for a greater variety of residential products, and most importantly, a regional recreation park. In just over a year, we consolidated 16 parcels of land totaling 184 acres immediately adjacent to Spring Mountain Ranch to address this need. We then mapped the property to provide 650 single-family residential lots, 16 acres of pocket and linear passive parks, and a 34-acre active recreation facility with baseball/softball diamonds, soccer fields, basketball and tennis courts, picnic areas, and snack bar and restroom facilities. The product of this second planning effort, which we named Springbrook Estates, included lots ranging from 4,000 to 5,500 square feet. These smaller lots complemented the larger 7,200 to 10,000 square-foot lots of Spring Mountain Ranch. The recreation park was sized to address the needs of both Spring Mountain Ranch and Springbrook Estates, as well as the rest of the Highgrove area.

The entire Spring Mountain Ranch project, except for 11+ acres of commercially zoned land, was sold to RWR Homes in 2004. Home construction is expected to begin in 2007. Springbrook Estates was sold to Centex Homes in two phases. Phase one sold in late 2005 and phase two was sold in mid 2006.

Investing in The Shopoff Group limited partnerships involves a high degree of risk, including the possible complete loss of your investment. In addition to being an illiquid investment with an uncertain liquidity date, these investments may have other risks. The past performance of any of The Shopoff Group's Limited Partnerships is no guarantee of future results. View Risk Factors.

Ramsgate

In January of 1998, we acquired 1,190 acres in Lake Elsinore, California through our partnership with Credit Suisse First Boston. The project was approved for over 3,000 residential units, along with commercial sites, school sites and parks. The partnership envisioned revising the existing maps and re-selling two to three years later, after we had enhanced the value.

Shortly after our purchase we encountered over 60 pairs of federally listed threatened birds known as the Coastal California Gnatcatcher, which required us to alter our plans. Over the course of several years of negotiation, we successfully obtained approvals on four revised tentative tract maps covering the 411-acre portion of the project northwest of Wasson Canyon. We had revised the four maps to provide for 1,013 lots, a school site, an apartment site, a community park and a commercial site.

In November of 2003, we sold the residential lots, school site and park site to Centex Homes, while retaining the apartment site and the commercial site. Centex is projected to sell the last of the 1,013 houses constructed on the lots sold to them by the end of 2007. In September of 2004, we sold the apartment site to Fairfield Residential, which completed the construction of 352 approved apartment units in 2006 and expects full occupancy in 2007. In late 2006, we sold a 127 lot map to MBK Homes, which followed our Specific Plan Amendment changing the commercial site to a single family residential site. MBK Homes plans to commence construction of the 127 unit private community in 2007.

As part of our negotiations with the U.S. Fish and Wildlife Service and other regulatory agencies, we agreed to sell 600 acres of the project lying southeast of Wasson Canyon deemed an occupied habitat for the Gnatcatcher. Although this sale was well below the value of residential land, we were still able to generate a profit and support Riverside County in the creation of its Multi-Species Habitat Conservation Plan. In addition, the negotiation allowed us clearance to process 296 lots on the remainder of the project. We anticipate a sale of these lots in 2007.

Our team also worked with the Riverside County Transportation Commission (RCTC) to expedite the widening and realignment of the adjacent Highway 74. The negotiation allowed us to maximize our development areas, as well as obtain several traffic signals to ensure quality access to the project. Additionally, we were able to install infrastructure at the same time as the RCTC performed their work, thus saving both time and money and ultimately yielding a greater sales price.

Investors should not assume that they will experience similar returns as to this investment or any other prior programs. Investing in The Shopoff Group limited partnerships involves a high degree of risk, including the possible complete loss of your investment. In addition to being an illiquid investment with an uncertain liquidity date, these investments may have other risks. The past performance of any of The Shopoff Group's Limited Partnerships is no guarantee of future results. View Risk Factors.

Villages at Wasson Canyon

At The Shopoff Group, we often have to exhibit great patience to achieve our desired results. We couple this with a reputation for skillful execution. Our acquisition of the Villages at Wasson Canyon is an example.

The Shopoff Group had previously looked at this land, which was adjacent to other Shopoff Group holdings and comprised of three expired tract maps encumbered by millions of dollars in delinquent property taxes and a defaulted assessment district. Due to market conditions, we decided not to pursue it further.

Circumstances changed in 2003 when the seller contacted us after having been through several failed sales contracts.

We moved quickly, acquiring only the most desired section of the expired maps, plus some additional acreage not included in the original offering. We then negotiated a settlement with the city of Lake Elsinore and the county of Riverside regarding the defaulted assessment district’s property taxes. This was a crucial element necessary for a successful project.

Once we had the tax issue resolved and the acquisition underway, we began to process a new map of the property. The new map yielded an increase of 20 lots and allowed for a total proposed development of 191 home sites. Due to the city’s desire to hasten the disposition of the assessment district’s property tax issue, we were able to obtain expedited processing for the project and received approval within one year of acquisition of the site.

In addition, our team pursued the acquisition of additional lands to create a second development. Over the course of a year, we successfully acquired enough land to process a second neighborhood of 275+ lots while gaining approval of the originally planned neighborhood. The second development required our team to utilize its skills at assembling multiple parcels. This required analyzing available property and effectively working with neighbors and adjoining landowners in order to achieve a win-win result for all interested parties.

The 191 lot Villages at Wasson Canyon first phase was sold to Lennar Homes in 2005. The site improvements were completed in 2006 along with the first home sales.

Investing in The Shopoff Group limited partnerships involves a high degree of risk, including the possible complete loss of your investment. In addition to being an illiquid investment with an uncertain liquidity date, these investments may have other risks. The past performance of any of The Shopoff Group's Limited Partnerships is no guarantee of future results. View Risk Factors.

1994 Land Fund II, Dallas I, LP

The Resolution Trust Corporation (RTC) auctioned off 37 defaulted land loans with a book value of $55 million. These loans were secured by land in five states and comprised over 6,000 acres of land.

In a very short period of time William A. Shopoff’s team of specialists set values and ascertained the risk of all major assets in the pool. His team set about winning the bid for the pool of loans for each asset within the land pool.

Based on the due diligence performed in evaluating these assets and determination of a preferred exit strategy for each asset, the results were phenomenal. Within 12 months all of our investors’ capital had been returned through the precise execution of the plans for each asset. Part of the plan was settling some of the larger defaults, as well as foreclosures and sale of the land on a few of these properties. This was done rapidly and relentlessly. The RTC had not pursued collection on many of these loans for over a year, whereas William’s team resolved many of the challenges in a matter of months.

Over the course of the next decade, our team continued to work on maximizing value, having to create numerous exit strategies ranging from subdivision of parcels, re-zoning and creating joint ventures.

This long-range plan resulted in the foreclosure or sale of the property or settlement of the debt on all parcels and generated a yield to our investors of over 40% per annum.

Investing in The Shopoff Group limited partnerships involves a high degree of risk, including the possible complete loss of your investment. In addition to being an illiquid investment with an uncertain liquidity date, these investments may have other risks. The past performance of any of The Shopoff Group's Limited Partnerships is no guarantee of future results. View Risk Factors.