Mountain Real Estate Capital has announced the closing of a new investment with Ocean Atlantic Companies of Rehoboth Beach to acquire and build out Breakwater, a 185-lot community located in Lewes.
The transaction represents MREC’s first investment in Delaware and first with Ocean Atlantic Companies and Schell Brothers Construction. Terms of the transaction were not disclosed.
MREC created a joint venture with Ocean Atlantic to execute a note purchase from a financial institution. The note purchase allows Ocean Atlantic to complete development in the community and for Schell Brothers to sell and construct homes on the remaining lots. The partnership anticipates a three- to four-year investment horizon in which it will develop the remaining lots and contract with Schell Brothers construction to build and sell single family homes, twin homes, and townhomes ranging in size from 2,000 to 4,000 square feet.
Chris Bornemann and Eric Bialke completed the investment for MREC. Bialke, director, states, “The Breakwater investment presented MREC with a unique opportunity to acquire a great community in a residential market that has been on our radar for some time. Our partnership with Ocean Atlantic and Schell affirms our investment strategy of partnering with best-in-class operators in targeted markets. We are excited to partner with a quality residential developer and the largest private homebuilder in southern Delaware and we look forward to expanding these relationships over the next few years.”
Joel Kaul, managing director for MREC said, “This is our 12th strategic builder/developer partner within our national platform and is a great addition to our current portfolio of over 21,000 residential lots/homes and 10,000 acres of developable land.”
Ocean Atlantic Companies President Preston Schell, states, “Ocean Atlantic and Schell Brothers are excited to be working with Mountain Real Estate Capital on the completion of the Breakwater community. MREC has been great to work with as their principals keenly understand the complexities, challenges and opportunities inherent in residential development. We are already underwriting two more opportunities with Mountain, and feel that with their financial backing, Ocean Atlantic and Schell Brothers can continue to grow at a market-dictated pace rather than a pace dictated by our own internal cash flow and financing capabilities.”
Mountain Real Estate Capital is the equity investment arm of the Mountain Real Estate Group and is focused on three types of investments:
• Large, broken master-planned communities and land developments
• Recapitalizations for real estate operators to capitalize on discounted payments to banks or investor buyouts; and opportunities to acquire new projects
• Partnerships with best in class developers and builders in primary and secondary markets across the country.
MREC is headquartered in Charlotte, N.C., with the homebuilder joint venture program based out of its Minneapolis office. The national origination team has additional offices in San Diego, New York, Richmond, Va. and Newport Beach, Calif. MREC continues to emerge as a leading provider of equity capital to homebuilders and residential land developers. Since 2010, MREC has acquired over 21,000 lots/homes and another 10,000 developable acres with approximately $350 million committed in 14 states.
Ocean Atlantic Companies has developed more than 30 projects in Delaware, totaling 4,700 units. Ocean Atlantic’s expertise includes residential real estate development, property acquisitions and dispositions, and identifying and valuing distressed real estate assets.
Schell Brothers is the largest private homebuilder in Southern Delaware with operations in more than 10 communities across the Sussex County market area. Schell has been recognized with numerous national quality and customer care awards including five gold’s at the National Sales and Marketing Awards at the recent International Builder’s Show and was recently profiled by Builders Magazine in 2011.