Hearthstone recognizes that the best project opportunities frequently demand a quick and decisive response. We make sure Hearthstone builders get this response when they need it. While the first project with a builder takes about 90 days, the timetable for subsequent projects is targeted for 60 days or even less in special circumstances. Key milestones in the approval process are described here.
All new builders must be approved before Hearthstone invests with them. Hearthstone's Land Committee is involved in the builder selection and approval process. Hearthstone examines the builder's track record, financial condition, trade and credit references and insurance loss history. Approval takes about two weeks.
Once approved, a builder begins submitting projects in Hearthstone's pre-screened selected target markets for consideration. Hearthstone's project approval process is designed to identify suitable investments early and close them rapidly.
An Initial Project Assessment (IPA) Application, which is a brief report outlining why the project is compelling and summarizing the principle strengths and weaknesses of the project, is prepared by the builder in collaboration with Hearthstone’s origination team and is submitted to Hearthstone's Land Committee for review. Hearthstone’s policy is to respond to all IPAs within five days of submission.
If the IPA Application is approved, Hearthstone works over the next four weeks with the builder in desk top and on-site due diligence leveraging the builder’s existing documents related to entitlements, land development, product and the market. Hearthstone's senior executives and underwriting team will tour the site. This work is summarized into a project budget and schedule as part of a full report.
Once approved, a letter summarizing the terms of the transaction and authorizing Hearthstone to commence project due diligence and hire third party consultants is issued to the builder by Hearthstone. The builder pays a deposit to cover the cost of the consultants.
It ordinarily takes 3 to 4 weeks for the third party consultants to finish their work and for the due diligence officer to present a final recommendation to Hearthstone's Land Committee. The committee meets as needed to vote on investments. No further approval is required to fund an acquisition.
Once a project is approved for acquisition, Hearthstone’s due diligence officer and in-house legal department shepherds it through to acquisition. Hearthstone's legal department is extremely sensitive to meeting deadlines, and has closed projects less than 48 hours after approval.