Tuesday, November 08, 2005

Hearthstone Turns its Eye to Vallejo's Hiddenbrooke Community

Hearthstone Turns its Eye to Vallejo's Hiddenbrooke Community
By Christine Cubé

VALLEJO - It's no secret Solano County is among the more affordable locations in the Bay Area.

But the county is adding a bunch of new homes that - by design - will be pricier than most.

That's because residential institutional investor Hearthstone has planted $25 million into a new development as part of Vallejo's Hiddenbrooke community.

San Francisco-based Hearthstone has partnered with Meritage Homes of California to build 71 upscale homes as part of The Summit at Hiddenbrooke.

The new homes, ranging in size from 1,993 square feet to 2,627 square feet, will start from the $700,000s. Company execs expect the homes to carry an estimated aggregate retail value of $51 million.

Anthony Botte, senior vice president for the western region for Hearthstone, takes pride in home development.

“We think it's providing capital to homebuilders,” Botte said. “There's a lot of pride in knowing you're providing the American dream to someone.”

Hearthstone has been in business since 1992.

To date, it has invested nearly $10 billion in more than 380 communities, representing almost 60,000 homes. Hearthstone competes with companies such as Wells Fargo and other institutional investors.

In a typical lot option transaction, Hearthstone buys land earmarked for residential development on behalf of a builder, who in turn buys back lots before construction begins.

Botte personally visits every piece of real estate when it comes to new investment.

In Vallejo's Hiddenbrooke, everything checked out, from location and setting to highway access and the golf course.

“I liked it,” Botte said. “It's a unique community, tucked away into the canyon. (Hiddenbrooke) is obviously a veteran community . . . it made a lot of sense.”

This is the twelfth transaction between Hearthstone and Meritage Homes Corp., which is headquartered in both Arizona and Texas.

Representatives with Meritage Homes didn't return calls seeking comment.

Hiddenbrooke is a master-planned residential development built by several merchant builders, starting in the late 1980s. In addition to the golf course, its amenities include a clubhouse, recreational facilities and parks.

Between 4,000 and 5,000 people live in Hiddenbrooke, Vallejo public information officer Mark Mazzaferro said.

“Triad Communities took over the project in 1998,” he said of the master developer, in an e-mail. “Since then, construction up there has been nonstop.”

Michael Wilson, vice president of ARC Inc. Architects and chairman of the Vallejo Chamber of Commerce board of directors, knows exactly the value of home ownership at Hiddenbrooke.

Wilson's brother lives there.

“He was one of the first families to move in there,” Wilson said. “Housing value there has already doubled.

“The housing market has been very strong - definitely in Vallejo and especially at Hiddenbrooke. It's a strong market and a great neighborhood. The exciting thing is that it is not just another group of houses going in but a culmination of the neighborhood. The community has definition and people know each other.”

Meritage Homes of California is a subsidiary of Meritage Homes Corp. (NYSE: MTH).

Last year, Meritage posted earnings of $139 million from revenue of $2 billion, with orders for more than 9,000 homes. The company has built almost 35,000 entry-level to semi-custom luxury homes throughout the south and west since its founding almost 20 years ago.

Reach Christine Cubé at 427-6934 or ccube@dailyrepublic.net.

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