Level Homes, John Engquist’s Baton Rouge-based homebuilding company, has sold its North Carolina holdings—including 586 lots in 5401, the Raleigh development owned by an arm of the Baton Rouge Area Foundation—to the publicly-traded Lennar Corporation, one of the nation’s largest homebuilders.
The deal, which closed Friday, includes more than 1,600 lots in seven Raleigh-area communities. Some of those lots are unimproved, while others are finished or have homes under construction. 5401 and a development called Oakwood comprise the majority of the lots in the deal, the financial terms of which were not disclosed.
Engquist says the decision to sell to Lennar was not a reflection of the performance of 5401 or any other North Carolina development. Rather, it was rooted in the challenges of managing complex developments from out of state.
“It was a really a span of control issue,” Engquist says. “We had a good manager up there but I’m a hands-on guy and it’s tough to be several states away and stay on top of everything so when we got an opportunity to sell we decided to take it.”
The deal marks the end of Level’s activities outside of Louisiana, Engquist says.
Level got into the booming Raleigh market in 2013, when Engquist helped BRAF’s real estate company, Commercial Properties Realty Trust, jumpstart the nearly 400-acre 5401 by acquiring a 150-acre residential tract for $12.9 million.
In the years since, another Engquist company—Engquist Development—has developed the dirt, while Level Homes has been among three builders, including Lennar, to build homes there.
Today, there are 375 finished homes in the development, as well as a clubhouse and pool, community greenhouse, walking trails and two county-owned schools. A multifamily complex is under construction and plans have been announced for the first commercial development, a microbrewery and brewpub in conjunction with the adjacent community college, though a long-promised grocery store and other retail never materialized.
The slow pace of commercial development is unrelated to Level’s decision to pull out, Engquist says.
“Until you get rooftops it’s hard to get the commercial,” he says.
While Level Homes is moving out of North Carolina, Engquist Development will continue to develop lots for Lennar from its unfinished inventory. That process is expected to take years. In 5401 alone, about half the property Engquist acquired remains undeveloped.