Centex in Negotiations to Sell Pointe West

Galveston County Daily News, February 19, 2008
by Laura Elder

GALVESTON — Dallas-based Centex Corp. confirmed Monday that it was in negotiations to sell some properties in its resort division, including the Pointe West development on almost 1,000 acres of the island’s westernmost tip.

“We’re in discussions with a potential buyer,” said Centex spokesman Eric Bruner. “It’s premature to discuss any further.”

Centex officials declined to name the potential new owner of what five years ago was billed as the most ambitious residential real estate project on the island.

Officials also would not specify which other Centex Destination Properties resorts are the subject of negotiations.

But sources say the company is in talks with Macfarlan Capital Partners, a Dallas-based real estate investment management firm.

Officials with Macfarlan Capital Partners did not return phone calls.

The move by Centex Destination Properties to sell some resort developments is among efforts to cut costs and generate cash during what Bruner called a housing “trough.” The company owns property from Texas to Hawaii.

The company said 2007 was one of the most challenging that it and the industry had faced in decades as the housing downturn proved “deep and widespread.”

Centex posted a loss of $975 million, or $7.94 per diluted share, for the third quarter of fiscal 2007 compared with losses of $228 million, or $2.02 per diluted share, for the same period a year before. The company’s third quarter ended Dec. 31.

The losses were on revenues of $1.9 billion, down 30 percent for the same period the year before.

News of the possible sale of Pointe West comes after Centex Destination Properties said in July it had “adjusted” the pace of its island development to accommodate market malaise. A lull in construction at Pointe West has generated speculation.

But representatives continue to sell at Pointe West, which is eventually supposed to feature 1,800 single-family and condominium units. The pool, club and restaurant are open at the resort, where some homes and condominiums already are built.

The exact number of units built at Pointe West was not immediately available Monday, Bruner said.

In March 2003, when Centex Destination Properties announced its plans for the island’s West End, it heralded one of the biggest real estate projects ever proposed in Galveston.

The company said it planned to develop a walkable community with single-family homes and multifamily residences from beach to the bay at San Luis Pass, on the last 3.5 miles of the island. Centex said only 300 acres would be used for development within the project, which was tentatively named Pointe San Luis.

Since then, more developers and investors have staked out spots along 32 miles of island beach. One group is Marquette Land Investment, which in 2006 paid a reported $33 million for 1,050 acres of the Chapoton parcel it plans to develop into a massive resort project to rival that of Centex Destination Properties. It was the biggest land deal in Galveston’s history.

The Chapoton Ranch land is between 8 Mile and 11 Mile roads on both sides of FM 3005. The majority of the tract is north of FM 3005, with some acreage on the beach and north of Stewart Road.

Centex said last year it worked to improve cost structures by aggressively paring the amount of land and lots it owned or controlled, among other efforts.

Macfarlan Capital Partners has completed $1 billion in commercial real estate transactions and $600 million in sponsored investments through 27 partnerships, according to promotional materials.