Huge Land Sale in Arizona

Updated from 9:57 a.m. EST

In what is being called the most expensive land sale in Arizona history, Toll Brothers (TOL Quote), Meritage Homes (MTH Quote) and Simon Property Group (SPG Quote) have purchased a 5,485-acre parcel in northwest Phoenix for $312 million.

The initial plans are for a mixed-use, master-planned community, with about 4,840 acres containing single-family homes and attached homes. The property was sold by DaimlerChrysler(DCX Quote), which uses it for vehicle testing and automotive development. DaimlerChrysler will continue to lease the property for the next few years.

Toll Brothers and Meritage each plan to build a "significant" number of homes on the site. Simon Property, the country's largest mall owner, has the option to purchase a large portion of the commercial property. Other parcels may be sold to third parties, the press release states.

Home sales are expected to begin in 2009. The site's general plan allows for 15,000 to 31,000 homes.

About 645 acres of commercial and retail development will include schools, community amenities and open space.

Toll Brothers said research published in The Arizona Republic calls this the most expensive land transaction recorded in Arizona history.

It's not clear how the joint venture is being structured. Stephen East, an analyst with Susquehanna Financial, says he believes Toll has a slightly larger ownership than Meritage.

"I think from a strategic standpoint it's great for both of them," East says. "If you go to the Phoenix market you just see (housing) pushing further and further out. This is a pretty attractive piece of land. It looks like it was a reasonable purchase price at $57,000 an acre. It gives them both tremendous land position for years and year to come."

Phoenix was the hottest housing market in the country last year. For the quarter ending Sept. 30, the National Association of Realtors says the area's median sales price rose 55% year over year to $268,000.