SKE Development Company is a boutique real estate development, brokerage, and property management company serving national and international investment clients who demand individual attention and creative approaches to maximizing investment returns.

Our approach aligns the interests of investors with the realities of owning investment property.

The Principals of SKE Development Company  are experienced real estate developers, attorneys, brokers, and property managers offering an unparalleled combination of skills. SKE Development Company has particular experience and understanding of cultural and business practices and needs relating to U.S., Asian, European, and South American clients.

Single Family REO Strategy

Throughout much of California, foreclosures continue to be sold at trustee sales (where properties are sold on court house steps of a county to the highest bidder) for a considerable discount to both the outstanding loan balance and the current estimated fair market value. With our REO strategy, we continue acquiring single family homes at prices averaging 60-80% below peak pricing and either renovating and selling them at a blended 14% margin within 60-120 days of acquisition or renting them for an average of $2,000 per month, with the intent of selling in 4-5 years. With the homes we're holding, the thesis is that pricing should return to the long term median in those submarkets, which would equate to 2x our all in cost. While it's difficult to project how long this market opportunity will last, we believe the window will exist throughout 2011, with the possibility of stretching past that timeframe should the measures the government and lenders are taking to stem the tide of foreclosures continue to prove ineffectual. Attracted by a flurry of press, we have seen the number of participants at trustee sales increase during the quarter, requiring our team to continue to improve efficiencies in the cost of acquiring, improving,and renting or selling the homes. However, we have remained disciplined in our underwriting.

Outlook

There is chance of continued volatility in sales volume and pricing in the coming year as the government pulls back on its support of the mortgage market and various tax credits. We expect mortgage rates to rise moderately over the course of the year. We believe that even with continued volatility, there are strategies that will work in most of our core markets - the SanFrancisco Bay Area, Orange County, San Diego and Riverside. These markets, among the hardest hit in the state, are presenting compelling opportunities as entities holding residential assets bring these assets to market over the course of the year. We are seizing upon these compelling residential opportunities in two ways. First, we are acquiring distressed single-family homes in the San Francisco Bay Area, Sacramento and San Diego. Second, we are using our land acquisition and entitlement expertise to acquire high-quality small to mid-size land positions in extremely supply-constrained markets at favorable pricing.

Overview

The California housing market has continued to stabilize through 2010. Pricing is up significantly in some markets and while sales are down slightly year over year, they are still at a healthy level. February's sales were down 3.8% from 2009 - below the state's longer term average. California home prices continue to stabilize, with median pricing up 14.3% year over year through March 2010. We remain cognizant that Federal and state tax credits have motivated a large number of buyers and that the eventual end of those programs may lead to a decline in sales volumes. Looking forward, there is a mixed view of 2010 pricing; Case-Shiller/Fiserv has most key California markets down 4-8%, while Rosen Consulting has those same markets up 2-10+%. However, there is consensus that 2011 will see price appreciation of 5 to 10% in most markets. New home sales volume is expected to remain depressed as foreclosure inventory is burned off (foreclosures currently make over 40% of sales volume in the state), and will not return to meaningful volumes until 2012.