Michael Wolf, 41, has been vice president of land acquisition for
luxury-homebuilder Toll Brothers Inc. in central and eastern Florida
during both the boom and bust of the past eight years. With more than $1
billion in acquisition funds,
the Pennsylvania-based company is looking for land deals in Central
Florida and elsewhere. He spoke recently with Staff Writer Mary Shanklin.
CFB: Last year your company spent about $430 million on land across the U.S.; how much of that was in Florida?
Across Florida we have probably spent $120 million in the last 18 to 24 months. At the same time, the company overall spent about $650 million in that time.
CFB: Is Toll Brothers making more or fewer land purchases these days?
The answer is really twofold. We’re attempting to ramp up but, needless to say, in Central Florida that’s been challenging to do. While it’s been difficult to acquire ground, it’s not for lack of trying.
CFB: What’s been the greatest obstacle?
The difference between the asking price of the land and its actual value to a homebuyer. And, in many cases, it’s been the availability of quality lots in the locations that the homebuyer would be interested in.
CFB: What would it take for you to purchase property in Osceola, Lake or Volusia counties?
One thing we’ve had in mind for outskirts areas has been a focus on age-restricted or active-adult lifestyle communities, because they’re less dependent on quality schools and the availability of traffic concurrency.
CFB: Found anything like that?
We haven’t to date, but there are definitely properties we’re focusing on and we’re definitely talking to sellers about those properties. In some cases, they are still a few years out. And in other cases, we still need to conquer the difference between the the bid and the asking price.
CFB: How has your strategy evolved for the amount of acreage you should buy?
Honestly, it’s tough to qualify in terms of acreage. We expanded from roots in the single-family market to a willingness to do active-adult, to multifamily, to low-rise to mid-rise. So acreage isn’t a big determinant. We’ve been fortunate enough to have $1.14 billion, plus about $785 million in long-term credit. So we’re not really limited in the size and acreage of what we’re looking for, as long as the price and market makes sense. … Acreage isn’t as much of a concern as the minimum lot count. We’re typically looking for 50 to 80 lots, and now we’re looking more at property with a four- to six-year life cycle.
CFB: David Weekley has had success with its scattered-lot building program; could Toll Brothers go that route?
We’ve avoided that in the past. The management structure that we operate under is a project-management system that was developed by Bob Toll, our founder and executive chairman, and our purchases are really conducive to that business model.
CFB: What are some potential land mines for buying distress properties?
For one, it is the ability to convert those assets into a marketable community that will be desirable for homebuyers. And then, on the hard business side, it is the ability to ensure that, during the time it sat in distress, that the entitlements and land-use approvals have not lapsed. Many of those transactions occur in such a short time frame that there is always the concern that it’s been properly foreclosed and all the necessary due diligence has been explored. The bank wants to close in 60 days, and it may take 90 days to do a real due diligence.
From Orlando Sentinel November 2011
CFB: Is Toll Brothers making more or fewer land purchases these days?
The answer is really twofold. We’re attempting to ramp up but, needless to say, in Central Florida that’s been challenging to do. While it’s been difficult to acquire ground, it’s not for lack of trying.
CFB: What’s been the greatest obstacle?
The difference between the asking price of the land and its actual value to a homebuyer. And, in many cases, it’s been the availability of quality lots in the locations that the homebuyer would be interested in.
CFB: What would it take for you to purchase property in Osceola, Lake or Volusia counties?
One thing we’ve had in mind for outskirts areas has been a focus on age-restricted or active-adult lifestyle communities, because they’re less dependent on quality schools and the availability of traffic concurrency.
CFB: Found anything like that?
We haven’t to date, but there are definitely properties we’re focusing on and we’re definitely talking to sellers about those properties. In some cases, they are still a few years out. And in other cases, we still need to conquer the difference between the the bid and the asking price.
CFB: How has your strategy evolved for the amount of acreage you should buy?
Honestly, it’s tough to qualify in terms of acreage. We expanded from roots in the single-family market to a willingness to do active-adult, to multifamily, to low-rise to mid-rise. So acreage isn’t a big determinant. We’ve been fortunate enough to have $1.14 billion, plus about $785 million in long-term credit. So we’re not really limited in the size and acreage of what we’re looking for, as long as the price and market makes sense. … Acreage isn’t as much of a concern as the minimum lot count. We’re typically looking for 50 to 80 lots, and now we’re looking more at property with a four- to six-year life cycle.
CFB: David Weekley has had success with its scattered-lot building program; could Toll Brothers go that route?
We’ve avoided that in the past. The management structure that we operate under is a project-management system that was developed by Bob Toll, our founder and executive chairman, and our purchases are really conducive to that business model.
CFB: What are some potential land mines for buying distress properties?
For one, it is the ability to convert those assets into a marketable community that will be desirable for homebuyers. And then, on the hard business side, it is the ability to ensure that, during the time it sat in distress, that the entitlements and land-use approvals have not lapsed. Many of those transactions occur in such a short time frame that there is always the concern that it’s been properly foreclosed and all the necessary due diligence has been explored. The bank wants to close in 60 days, and it may take 90 days to do a real due diligence.
From Orlando Sentinel November 2011
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