Resmark Equity Partners LLC has created a novel real estate strategy — buying model homes of U.S. homebuilders and leasing the homes back to them.
"This is a unique strategy," said Ziv Cohen, Los Angeles-based CIO of Resmark, in an email. He added that the strategy was not driven by a hot housing market but by homebuilders' needs in any market condition. "In fact, it may be more valuable in a down market when a builder needs more cash to sustain a longer selling period," Mr. Cohen said.
Resmark launched the strategy, dubbed the Resmark Model Home Sale-Leaseback Venture, with an initial $220 million commitment from domestic and international clients of real estate consultant Townsend Group.
Typically, a large developer has a considerable amount of money in the model homes used to show potential buyers. When the tract homes are sold, the homebuilder then will sell the model homes.
Model homes are a "mission-critical asset" for large homebuilders, Mr. Cohen said.
The Resmark program gives developers the option to the sell the homes while retaining their use through a lease-back. When the model homes are ultimately sold, the homebuilder shares in any appreciation in the value of the home, Mr. Cohen said.
"The initial commitment to the venture will allow us to purchase over $600 million of model homes, which we project will expand rapidly," said Scott Miller, partner at Townsend Group, in a written statement.