The bidding war between Starwood Capital Group and D.R. Horton, Inc. to buy Forestar Group Inc. is over, with D.R. Horton emerging as the clear winner. The homebuilder has finally signed a definitive merger agreement to buy 75% shares of Forestar Group, a residential and mixed-use real estate development company.
D.R. Horton’s latest cash offer of $17.75 per Forestar share seemed to be a “superior proposal” with respect to its earlier bid of $16.25 per share and from the $16 per share offer price from the agreement signed between Forestar and Connecticut-based Starwood Capital Group. The latest merger deal is valued at about $560 million. The merger is expected to close in the fourth quarter of 2017 upon approval of Forestar shareholders and other closing conditions. D.R. Horton’s latest cash offer of $17.75 per Forestar share seemed to be a “superior proposal” with respect to its earlier bid of $16.25 per share and from the $16 per share offer price from the agreement signed between Forestar and Connecticut-based Starwood Capital Group. The latest merger deal is valued at about $560 million. The merger is expected to close in the fourth quarter of 2017 upon approval of Forestar shareholders and other closing conditions. Currently, rising land costs and a tight labor market are threatening homebuilders’ margins, thus hampering initiatives taken by them to tap the ongoing strength of the U.S. housing market. Limited capital for land and land development has left entitled lands in short supply while growing demand drove land prices higher. The labor market has also tightened with limited availability of labor arresting the rapid growth in housing production. Forestar owns interests in 49 residential and mixed-use projects comprising 4,400 acres of real estate spanning across 10 states and 14 markets. The deal will also help D.R. Horton expand operations in Texas, which is witnessing positive housing momentum. Earlier, Chief Operating Officer, Mike Murray, had said that the deal would generate $1 billion more in annual revenue for D.R. Horton over five years. This buyout will give a meaningful percentage boost to D.R. Horton’s current holdings of 227,000 lots (owned and under control). The company remains on track to close approximately 45,000 homes in fiscal 2017. The deal would add to D.R. Horton's fiscal 2018 earnings. Land development and homebuilding are correlated but fundamentally different operations. With an impressive second-quarter sales backlog of $4.4 billion, along with a well-stocked supply of land, lots and homes, D.R. Horton is a best-in-class homebuilder that will benefit from a strong strategic relationship with a separate land development company like Forestar. The deal will also help the company to increase focus on maximizing return on assets and inventory turns. Lennar Corp took similar steps in February by acquiring Florida-based homebuilder WCI Communities Inc. in order to enhance its land holdings. WCI Communities is a premier lifestyle community developer and luxury homebuilder of single and multi-family homes. Land developers are facing difficult times in securing fund from banks as well as lenders who are not willing to invest in land and home lot development. Thus, this deal will give Forestar access to the capital it requires to operate and enhance throughout the nation. The transaction also enables Forestar to remain a public company, thus ensuring continued access to capital in order to support the increasing scale of the business. Again, it will help Forestar grow organically to become a leading residential land development company in the country, selling developed residential lots to D.R. Horton and other homebuilders. In the long term, D.R. Horton has plans of gradually diminishing its ownership position in Forestar and boosting the public float of the firm's stock. Forestar will continue to trade under NYSE under the symbol “FOR”. Reported by Zacks (June 30, 2017) For complete contact information for all offices and key personnel of D.R. Horton refer to The Directory of Multifamily Builders & Developers and online database.
0 Comments
Trammell Crow Residential has closed on the purchase of 20 acres of land in northeast Boulder, where the Dallas-based company will build Diagonal Crossing, a mixed-use development of 357 apartments, offices for nonprofits, a restaurant and a green space.
Diagonal Crossing Apartments LLC, an entity registered to Trammell Crow Residential in Dallas, paid $7.5 million to Birch Mountain LLC for the triangle-shaped parcel of vacant land, according to public records. Nonprofits Meals on Wheels and Studio Arts are expected to occupy offices in the complex. The site, commonly called McKenzie Junction, is between the Diagonal Highway, Independence Road and Foothills Parkway. It has proved to be a challenge to developers. The site has been looked at by several developers during the past decade, having drawn interest from a big-box retailer, home developer and a private business interested in building a sports complex. Its close proximity to high-volume traffic presents challenges to access because of the highways. It also is near the Boulder Municipal Airport. The city of Boulder’s Planning Commission approved this project April 20, and since the Boulder City Council chose not to call the project up for review, it has the green light. Reported by BizWest (June 22, 2017) For complete contact information for all offices and key personnel of Trammell Crow Residential refer to The Directory of Multifamily Builders & Developers and online database. Traton Homes has tapped Richelle Bell to be the company’s new chief financial officer. The CPA and building industry veteran moves to the company after years with CalAtlantic Homes and Ryland.
“Our privately-held company has just celebrated its 46th anniversary, and we continue to grow,” said Bill Poston, who co-founded Traton Homes with his brother, Milburn Poston, in 1971. “We know the importance of working with the best in the business, and are honored that Richelle shares our long-term vision. She is a vital part of Traton’s next chapter and its ongoing success.” “This is an exciting time to join Traton Homes,” said Bell. “Just in the next couple of months, we are getting ready to open three new communities in Cobb County, including a new townhome community near Marietta Square. Traton is respected throughout the Southeast for its well-crafted, well-designed homes, its impeccable business practices, and its long-standing relationships with suppliers and homebuyers alike, and I am proud to be part of the Traton team.” Bell received a bachelor’s degree in accounting from Kansas State University, where she was also a member of the university’s golf team. She most recently served as VP of Finance for CalAtlantic - Atlanta Division. Prior to that, she worked with Ryland Homes and Arthur Anderson, both in Orlando. She served as board treasurer of the Greater Atlanta Home Builders Association from 2011-2013. Traton Homes is building in Cobb, Cherokee, North Fulton and South Forsyth counties. Reported by Company press release (June 7, 2017) D.R. Horton has offered to buy 75 percent of Forestar Group Inc. for about $520 million, pitting the No. 1 U.S. homebuilder against Starwood Capital Group, which in April agreed to buy the Texas-based real estate developer.
D.R. Horton said it offered $16.25 per Forestar share, which represented a 14 percent premium to the $14.25 offered by Starwood, the company said. Barry Sternlicht-led Starwood, an investment firm with a focus on real estate, manages assets of more than $51 billion. It declined to comment on D.R. Horton's offer. Forestar said in a statement late on Monday it would review D.R. Horton's offer and that it had not yet determined if the proposal was superior to Starwood's. Forestar's shares closed up 12.7 percent at $16, while D.R. Horton's shares ended 1.5 percent lower at $33.29 on Monday. D.R. Horton's bid highlights the pressure on U.S. homebuilders to seek ways to boost their land holding as rising land acquisition costs and a tight labor market hamper efforts to tap the recovery in the housing market. D.R. Horton's smaller rival Lennar Corp. in February bought fellow Florida-based homebuilder WCI Communities Inc, as it seeks to boost its land bank. The deal could "enhance (D.R. Horton's) land acquisition capabilities as it relates to larger master-planned communities which has historically been (Forestar's) focus," Wedbush Securities analyst Jay McCanless wrote in a client note. Forestar, which mainly develops lots and sells them to homebuilders, owns interests in 50 residential and mixed-use projects comprising 4,600 acres of real estate. The deal would also help D.R. Horton expand operations in Texas — a state where the housing market "remains positive," CFRA analyst Ken Leon said. Under the proposed deal, Forestar will remain public to ensure continued access to capital to help fund its increasing scale, D.R. Horton said. The deal would generate $1 billion more in annual revenue for D.R. Horton over five years, the company's Chief Operating Officer Mike Murray said on a call with analysts. D.R. Horton said it had the cash and other immediately available capital to fund the deal. Forestar stockholders have the option of either receiving cash for each share they own or retaining the share. Moelis & Co was D.R. Horton's financial adviser. Reported by Reuters (June 5, 2017) |
Author
Archives
January 2022
Categories |