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California Investors Gamble and Buy 798 Home Lots in Hard-Hit Reno, NV

(RENO, NV) -- Talk about a positive outlook in one of the nation's hardest-hit residential pockets -- two California investors-developers have it in spades.

Reno, NV is now in its fourth year of a real estate downturn that is showing no signs of abating quickly. But that didn't stop PCCP LLC and Lewis Operating Corp. from outbidding a host of potential buyers at a bankruptcy auction this week.

PCCP of El Segundo, CA and Lewis of Upland, CA paid $6.6 million for 798 finished and partially finished residential lots in southeast Reno.

The price equates to $8,271 per lot, about a fourth of its value in pre-Recession times, according to brokers familiar with the Reno market.

Damonte Ranch, Reno, NV

The auction was held by LandSource, a joint venture between homebuilder Lennar Corp., LNR Property Corp. and MW Housing. CALPERS of Sacramento, CA is a principal member in MW Housing.

About 600 of the lots are in the 5,000-home Damonte Ranche, reported to be a highly-desirable 2,000-acre master-planned community.  Damonte Ranch is at the base of the Sierra Nevada Mountains, 30 minutes from Lake Tahoe and fives south of Downtown Reno.

"Even in this down market, there is still strong demand for new homes that are priced correctly, specifically in this region of Nevada," maintains Jim Galovan, vice president, PCCP.

He adds, "We intend to add value to the lots in various ways, including the possible re-entitlement of a portion of them to a product. Type that will gain more market acceptance in the near term.

"The business plan is to then bring the lots to market for sale to homebuilders, beginning in 2011, market permitting.:

Galovan says the deal was done because Damonte Ranch is "the most desired new home community in Reno with a limited number of improved lots."

He says that while the bidding competition included investors, investment funds and homebuilders, the PCCP-Lewis partnership "was strategically positioned to prevail in acquiring the property."

Galovan did not disclose terms of the acquisition, or if it was an all-cash deal. The owner of record will be the partnership's California Smart Growth Fund IV LLP.

The transaction marks the first combined purchase by PCCP and Lewis Operating Co.

"The firms plan to actively seek additional opportunities" because "they have complimentary skill sets which will aid them in acquiring distressed assets in need of recapitalization and restructuring," Galovan says.

PCCP, formerly known as Pacific Coast Capital Partners, specializes in providing opportunistic debt and equity capital for real estate in the U.S.

Lewis Operating Co. is a privately held real estate development company. 

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