The Pacific Palisades fires of January 2025 destroyed 6,800 structures, leaving thousands of homeowners with few viable options: sell their land at low prices or take on significant debt to rebuild. For many residents, especially those over 60 who make up a large portion of the community, neither path seemed financially attractive or practically feasible.
This situation led to the founding of Phoenix Equity Partners, a company providing a “third path” for fire victims by creating partnerships between homeowners and builders.
“About two months after the fires, we started trying to understand how long it would take to rebuild,” says Helen Kaye, Partner at Phoenix Equity Partners. “We very quickly realized that if we look at the Malibu Woolsey fire, seven years later, less than 50% of the homes have been rebuilt. If Palisades had that type of rebuilding pace, it would just be devastating.”
The team’s research uncovered a troubling fact: more than 80% of Pacific Palisades homeowners were underinsured. This was made worse by State Farm’s decision to withdraw coverage from many Palisades properties in December 2024, pushing residents onto California’s FAIR Plan, which many locals view as inadequate due to its limited coverage.
“If you’re like everyone else, you just want insurance. You don’t think about reading the fine print in the coverage section or estimating yourself how much a rebuild would actually cost,” Kaye says. “That’s where the majority of homeowners find themselves.”
This insurance shortfall, combined with rising construction costs and builders setting high per square foot minimums, created what Kaye describes as “a massive gap for homeowners looking to rebuild where it’s very hard for them to finance and many have no options.”
Phoenix’s approach brings homeowners and local builders together in joint ventures. Homeowners contribute their land to the newly formed partnership, while builders provide construction expertise and a lower cost to build. The partnership shares costs, risks, and profits from either selling the completed home or allowing the homeowner to refinance the builder’s share and return.
“The idea is to pair homeowners with builders where homeowners can bring the land, the builders can bring economies of scale and really low cost to build, and through the partnership, together, they create value,” Kaye explains.
Steve Mikhalevich, Head of Development at Phoenix, highlights the flexibility of this model: “Many of the homeowners just don’t know where they’ll be in two or three years from now, and it’s very difficult for them to make the decision to build and take on all that mental burden. For them, the idea of ‘I can make that decision later, and I can have someone else do a build at much better cost than I would on my own’ has really resonated.”
When a homeowner contacts Phoenix, the team assesses their goals and preferred timing. They then submit the property to a network of local builders already working in the Palisades area. If there’s a fit, Phoenix helps create the financial and legal structure for the partnership.
“We start by triangulating the land’s value using several data points, then work with the homeowner to align on the rebuild plan, profit split, and projected equity across different exit scenarios,” Kaye says.
Phoenix acts as an intermediary, drafting joint venture agreements and ensuring both sides are protected. “Because we’re not builders ourselves, we can truly be a platform to ensure that the homeowner feels like their interests are being represented. So does the builder,” Kaye explains.
Typically, the homeowner contributes land (most own their properties outright), while the builder funds the construction—with their own capital and through financing that can also incorporate the homeowner’s insurance proceeds, SBA funds, or debt partners that Phoenix helps arrange. Construction timelines generally range from 12 to 24 months, depending on lot conditions, home size, and design.
Phoenix estimates about 1,200 Pacific Palisades homeowners could benefit from this partnership model.
The emotional impact has been significant. “For the first six months, people were still in shock, emotional shock,” Partner Veronica Descotte, says. “They lost not just their home, but in many cases, everything they had in their homes, their art, their memories, just all the things that matter to us, especially families that have lived in the same house for 30+ years.”
Nearly a year later, the market is beginning to shift. “You’ve seen some people saying, ‘Okay, let’s just cut the losses and sell a lot, we’ll take whatever we can get.’ You’ve seen an increase in rebuilds. Both Steve and Helen were driving by recently, and there are several streets now where you see multiple homes being built,” Veronica notes.
However, most remain undecided, waiting for market recovery or searching for immediate solutions.
The aftermath of the fires has attracted buyers making low offers for distressed properties. “What’s especially upsetting to us is when it happens off market, when homeowners don’t even get the benefit of having a free market speak for itself in terms of the value of their land,” Kaye says.
Phoenix aims to educate homeowners: “Our job is to say you don’t need to sell today, when there’s about to be a wave of available land that comes on the market at really depressed pricing. You can hold on to the value and then build on that. If you develop your property, your equity is going to be much greater than if you just sell the land.”
While Phoenix was created in response to the Pacific Palisades fires, the founders see the potential for their model in other situations. “This is a highly scalable model that doesn’t necessarily have to apply to a fire rebuild,” Veronica says. “This can be utilized for anyone who owns land outright, and if they’re looking for a platform that helps them maximize the value of that property through a home build.”
Phoenix’s background in mergers and acquisitions, rather than construction, is a key strength. “We’re not a builder, so there’s a level of trust that we’re not going to try to capture additional upside, whether that’s through fees related to the rebuild or in the back end,” Kaye says. “We’re creating that equal platform for both to feel safe.”
Phoenix continues to work with families in Pacific Palisades, offering a model that could help other communities facing similar challenges. By structuring partnerships that align the interests of homeowners and builders, they are showing how new approaches can address the complicated mix of insurance shortfalls, high construction costs, and the need for community recovery.
For an industry often focused on conventional development, Phoenix Equity Partners introduces a different approach to disaster recovery, one that supports community rebuilding while forming sustainable business partnerships that benefit everyone involved.
Explore similar articles from Our Team of Experts.
The Greater Hartford metropolitan area has rapidly become one of the most active housing markets in the country, creating both new opportunities and complex challenges for development offici...
