The Lennar Corporation said it will merge with CalAtlantic Group to form America’s largest homebuilder in a stock-and-cash deal worth $5.7 billion. The deal would create a behemoth with around 240,000 building plots in 21 states, a market value of about $18 billion and combined revenue of $17 billion over the past 12 months.
The announcement came as labor shortages and destructive weather in the United States are weighing on new construction.
Parts of the South were hit hard by Hurricanes Harvey and Irma, with new housing construction in the region falling 9.3 percent last month as housing starts across the country declined 4.7 percent to a one-year low of 1.127 million units.
Homebuilders have expressed steady concerns over their collective struggle to find skilled labor, with 60 percent saying they had found it difficult to attract the right workers during the third quarter of the year, according to a survey published last month; another 30 percent said they had moderate difficulty finding such workers.
The trend could be exacerbated by the devastating wildfires in California, which are expected to increase the demand for skilled employees to carry out rebuilding.
By merging, Lennar and CalAtlantic hope their size will help them achieve “efficiencies in purchasing” and to gain “access to land, labor and overhead allocation,” Stuart Miller, Lennar’s chief executive, said in a news release. The companies hope to generate cost savings of $250 million annually.
“This combination increases our scale in the markets that we already know and in the products we already offer,” Mr. Miller added.
Under the deal’s terms, CalAtlantic shareholders would receive 0.885 of a Lennar share. That would equate to $51.34 a share, a 27 percent premium above the stock’s closing price on Friday. The transaction values CalAtlantic at $9.3 billion, including debt.
CalAtlantic shareholders also have the option to take all or a portion of their shares in cash, at $48.26 a share. The cash payments would be limited to a total of $1.2 billion, Lennar said.
On completion of the transaction, CalAtlantic shareholders are expected to own about 26 percent of the combined company. The deal is expected to close in the first quarter of 2018, subject to shareholder approval.
“This combination is first and foremost to enhance shareholder value,” Mr. Miller said. “The combined company will have a strong balance sheet and generate significant cash flow available to pay down debt and repurchase shares, which will improve returns on capital and equity.”
Mr. Miller and his family trust, which hold a 41.4 percent voting interest in Lennar, and MP CA Homes, an affiliate of MatlinPatterson Global Opportunities Partners that holds a 25.4 percent voting interest in CalAtlantic, have agreed to support the deal, the companies said.
Citigroup and the law firm Goodwin Procter advised Lennar; J.P. Morgan and the law firm Gibson, Dunn & Crutcher advised CalAtlantic.
Reported by The New York Times (Oct. 30, 2017)
For complete information on Lennar and CalAtlantic including all corporate and division offices and leading personnel refer to The National Builders Directory and Online Database.
CalAtlantic Homes plans to build a new single-family community and NRP Group will build senior apartments as part of a large housing development being built on nearly 90 acres in Avon, Indiana.
Equicor Real Estate LLC is the master developer of the project and recently received the necessary approvals to proceed. The project is an extension of the Reagan Park development at the northwest corner of East County Road 100N and Ronald Reagan Parkway.
Equicor Real Estate LLC’s plans call for 165 single-family homes to be constructed by CalAtlantic Homes of Indiana, as well as 98 senior apartments and 40 assisted-living units.
The senior apartments will be built by Cleveland-based NRP Group and the assisted-living units by Los Angeles-based Prudential Real Estate Group. Both senior-living projects are expansions of their existing developments in Reagan Park, developed by Carmel-based Leo Brown Group LLC.
“It’s just a great location,” Equicor CEO Greg Small said. “What we hear from the town of Avon is that they really need available housing. People want to live in Avon.”
Prices for CalAtlantic’s homes will range from $225,000 to $275,000, Small said. CalAtlantic likely will close on its parcel by the end of November and will immediately begin installing infrastructure, he said.
Reported by The Indianapolis Business Journal (Oct. 28, 2017)
For complete information on CalAtlantic and NRP Group including all corporate and division offices and leading personnel refer to The National Builders Directory and The Directory of Multifamily Builders & Developers and Online Databases.
Fischer Homes is entering the fast-growing Louisville, Ky., market with the purchase of the majority of the land assets of Dogwood Homes effective January 1, 2018. Dogwood Homes is a top Louisville builder owned by Richard Miles, who started the company 20 years ago and is set to deliver over 200 homes in Louisville in 2017. Privately held Fischer Homes is the 38th largest builder in the U.S. and has been in business since 1980.
Richard Miles, President of Dogwood homes reflected, “Since our first discussion, it became apparent we had a fit with the Fischer Homes culture and that they would be a great addition to what we are doing in the Louisville market. Fischer is known for customer satisfaction and building communities that stand the test of time. This is the right fit for Dogwood Homes, and we know our customers will benefit from this deal.”
Miles will begin working for Fischer Homes as the Market President for the new Louisville Division of Fischer Homes effective January 1, 2018. The Louisville division will be building homes in Bullitt, Spencer, Oldham, Shelby, and Jefferson counties.
“We are so pleased that Richard and his team will be joining the Fischer Homes family. Richard brings a wealth of homebuilding experience to our organization. He and his team have done an amazing job of growing their business in the Louisville market, and we look forward to their ongoing contributions to our business,” said Tim McMahon, President and COO of Fischer Homes.
The Dogwood team will remain in place with this transition. Dogwood is operating in 14 area communities in Louisville. Miles has grown his team and communities by focusing on quality construction and being in the right locations for growth in the market. This focus on customer service already at Dogwood is a natural fit with Fischer Homes, and Fischer Homes will also bring its design capabilities and community expertise to Dogwood communities and future developments in the region.
Bob Hawksley, CEO of Fischer Homes, commented on the strategic fit of this expansion,
“The market in Louisville is poised for growth in the next decade and beyond. Our portfolio of Fischer Homes designs, community planning expertise, and Richard and the Dogwood team will enable us to effectively meet the growing housing demand in this dynamic market.”
Fischer Homes will be completing the construction management services beginning on January 1 for any homes still under construction, and will also perform warranty services for Dogwood Homes customers.
Fischer Homes has been on a rapid growth trajectory since entering the Columbus, Ohio, market in 2008 followed by Indianapolis in 2010, and Atlanta in 2012. In addition to being the market leader in the Cincinnati MSA, Fischer Homes is number three in the Columbus market in sales, and number four in Indianapolis, and is on track for over 200 closings in Atlanta this year.
Reported by Fischer Homes Company Blog (Oct. 5, 2017)
For complete information on Fischer Homes including all corporate and division offices and leading personnel refer to The National Builders Directory and Online Database.