DeNardi Homes
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Richard Luftig | Managing Partner
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rluftig@castleplacement.com |
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(212) 418-1181
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Overview
DeNardi Homes is raising $100 million to build a leading land entitlement platform serving Silicon Valley and the broader Bay Area. The platform will acquire underutilized infill parcels, secure residential entitlements, and deliver shovel-ready sites to homebuilders. Its integrated model is designed to generate proprietary deal flow, deepen industry relationships, and streamline execution—positioning DeNardi Homes as the region’s preferred entitlement partner.
- California faces a ~3.5M-home shortage and is mandated to add 2.5M homes by 2030, including ~441K in the Bay Area – a ~$265B market. New housing laws have made entitlement more rules-based and repeatable
- DeNardi controls underutilized parcels through options, optimizes for highest-and-best use, and exits at the Tentative Map stage to institutional builders – capturing key value creation without construction risk. Downside is limited to fees and a 3-5% deposit; illustrative $15M basis → $25M exit
- Led by a third-generation Bay Area developer and former Morgan Stanley senior banker. The team has entitled 40+ projects and completed 10 deals, deploying $54M and generating $121M in proceeds and a 58% average ROE. Targeting 30%+ LP net IRR, 2.0x equity multiple, and 8% preferred return
- The $100M funds option deposits, entitlement costs, and the broader platform opportunity. The two warehoused seed assets already in the portfolio (Los Altos and Atherton) are now fully subscribed, underscoring strong investor interest in the platform
THE OPPORTUNITY
California’s housing mandate has made entitlement a structural opportunity
OUR STRATEGIC ADVANTAGE
We bridge fragmented land supply with growing institutional demand
The Market Structure Today
DEAL ECONOMICS
Purchase options create asymmetric upside
Purchase options let us control an asset while entitlements advance. Our downside is limited to professional fees and a 3–5% deposit, while our upside includes the full increase in entitlement value—the largest potential value gain per dollar invested in the development cycle.
WALK ME THROUGH A DEAL
A staged process caps exposure and avoids construction risk
01
Sourcing
0-6 months
Target infill sites with underutilized office, retail, or single-family uses. Secure a purchase option with a 12–24-month term.
At risk: 3% deposit, contingent
02
Feasibility
+4 months
Complete surveying, programming, underwriting, a Phase I environmental assessment, and the SB 330 pre-application.
At risk: $5–10K; deposit refundable
03
Entitlement
+8–12 months
Submit the formal SB 330 application, manage city and CEQA review, use SB 35 or AB 130 where applicable, and close within the option period.
At risk: $500–700K to Tentative Map
04
Exit
+6 months
Sell the site—with a Tentative Map and vested rights—to builders or land-capital firms. A Final Map is optional.
Optional: $750K–$1.0M for construction documents
TARGET BUY BOX
A disciplined five-part buy box concentrates capital in the highest-conviction sites
Qualified markets: Palo Alto, Los Altos, and Atherton
Premier Bay Area infill in established, high-demand neighborhoods
Underutilized office, retail or single-family land and buildings
Residential or mixed-use projects with more than 66% residential use, as required by state law
Upzone or unlock value through entitlement; never pursue downzoning
Mid-market sites where state law produces outsized lift. Additional screening factors: talent concentration, school quality, supply constraints, and price depth
CASE STUDY
570 S. Rengstorff Avenue
Mountain View, CA · 85-unit rowhouse subdivision · Completed & sold March 2023
