La Jolla Shores is an example of Fremont Realty Capital’s ability to take advantage of a special situation to acquire a prime under-developed property near the waterfront in La Jolla, California and also benefit from the cyclical trend of increased residential condominium demand. The property was sold upon receipt of entitlements, avoiding project risk during development of the property.

In 2001, Fremont Realty Capital formed a joint venture with CLB Partners, Ltd. to acquire four acres of land zoned for the development of condominium units in La Jolla, California.  The business plan was to secure all required project approvals and development entitlements, substantially complete design of the project, and then sell the fully entitled land and project to a qualified builder in late 2002 or early 2003. 

Although the project was acquired with zoning in place, project approvals and development entitlements were still to be obtained.  Obtaining those approvals and entitlements was a two-part process, and expected to take up to 24 months from the date of acquisition.

The approvals and entitlements were achieved ahead of schedule and in 2002, the project was sold to the U.S. subsidiary of a publicly listed British homebuilder.  The sale of the parcel generated a considerable gain, exceeding our proforma expectations.