Rolling Hills

Rolling Hills Lake Asbury is a master-planned community of 761 planned homes located in Green Cove Springs, Clay County, Florida, a bedroom community of Jacksonville. Set in a large nature preserve area, the community features an “A” rated school district and a wide variety of home styles and sizes, catering both to families and retirees. The $3.5 million community center (clearly the best in the region) comprises a 9,300-square-foot clubhouse, competition swimming pool with adjacent recreation pool and slide, 6 tennis courts, game lawn, barbeque area, amphitheater, lakes and walking trails, all set in a large nature preserve area.

Common Bond’s Involvement

Rolling Hills currently has 322 fully developed lots along with 439 fully engineered and entitled lots for future development for a total community of 761 units. The community has the option to add additional lots and still be within the allowable density count. Clay County is sometimes seen as the value alternative to the higher priced counties, such as nearby St. Johns, and has historically attracted national homebuilders selling homes in the high $100,000 to mid $300,000 range.

During the last recession and with only 70 homes sold, Rolling Hills’ original developer became delinquent on both the development’s property assessments securing the Community Development District (CDD) bonds and the developer’s bank loan. Facilitated by Common Bond’s purchase of a minority interest in the delinquent bonds and subsequently coordinating with all stakeholders, Common Bond acquired the Rolling Hills property in February 2013.

Owing to its strong relationships with the other bondholders and with the project lender, Common Bond successfully negotiated a transaction which reduced its investment costs and the risks of having to inject new capital to re-start the stalled project.

Common Bond acquired the Rolling Hills property in February 2013 following negotiation of complex workout agreements mutually acceptable to the original project developer, its bank lender and the holders of some $15 million in Community Development District (CDD) bonds. Before the market recession, approximately 70 homes were built and sold. In the ensuing downturn, the original developer became delinquent on both bond assessments and the bank loan.

Strategy

Going forward, the strategy for Rolling Hills is to offer homes in the $170,000 to $300,000 range with the optimum market price of $170,000 to $225,000. This can be accomplished in two ways with both approaches focusing on value and a community amenity package second to none in the competitive area sub-market:

The first approach utilizes national builders to purchase lots and segment the market into two distinct villages of homes priced from $170,000 to $225,000 in one village and from $215,000 to $300,000 in the second. This should maximize absorption. Currently, Common Bond has a contract with a national builder targeting the $215,000 to $300,000 market and is in discussions with builders for the $170,000 to $225,000 market space.
The second approach would involve creating a joint-venture with a local builder. This second approach would allow Common Bond to capture additional profit potential by sharing in the building profit in addition to the lot profit.

The fully entitled, but undeveloped, lots could also be approached utilizing these same two strategies or could be sold as “paper lots.” The strategy employed will be dictated by the market’s need and ongoing evaluation of appropriate exit alternatives.