On Jan. 1, the home building sector had its first major mergers and acquisition deal close, as Dan Ryan Builders sold a major equity stake to Sumitomo Forestry. The deal will give DRB a huge capital infusion to compete among deep-pocketed publics, and give Sumitomo a powerhouse middle Atlantic region beachhead in a growing multi-regional footprint.
Dan Ryan Builders, whose executive management announced the plans to associates today, developed this official press statement, which will likely to go live in the next several hours:
Recently announced, Dan Ryan Builders, privately held Mid-Atlantic builder, joined forces with Japanese powerhouse Sumitomo Forestry America, Inc., and Sumitomo Forestry Co., Ltd, a 320 year old, publicly traded homebuilding, forestry, timber and wood products company based in Tokyo, Japan. This is Sumitomo Forestry America’s fourth partnership with an American homebuilder expanding their geographic presence to include Seattle Dallas/Ft. Worth, Houston, Austin, San Antonio and the Mid- Atlantic markets.
Dan Ryan Builders is the nation’s 35th largest homebuilder and #16 largest private builder currently with operations in 6 states and 10 markets along the East Coast. Chief Operating Officer, Ronny Salameh stated, “The company couldn’t be more excited about this new partnership as it will allow us to continue to grow our current market positions and possibly expand into new markets.” Dan Ryan Builders will maintain its existing management and operational structure, including its executive team: the Founder, President and Chief Executive Officer, Dan Ryan; Senior Vice President & Chief Financial Officer, Paul Yeager and Senior Vice President & Chief Operating Officer, Ronny Salameh.
“We will keep our name, brand and commitment to our customer moving forward. And I am excited about the opportunities this partnership will provide for our employees, vendors and customers.” said, [2015 Hearthstone winner] Mr. Ryan. “Having such a strong partner as Sumitomo Forestry America will give us the financial strength for solid, sustainable, organic growth. I am proud of what Dan Ryan Builders has accomplished over the past 25 years, and I look forward to continuing our legacy for years to come”.
Dan Ryan Builders, builds townhomes and single family homes for predominately “first time” and “first move up” buyers throughout the Mid-Atlantic Region. They build homes in PA, MD, WVA, VA, NC & SC and currently have over a 100+ communities in the region.
Builder Advisor Group served as financial advisor to Dan Ryan Builders in the transaction. Falls River Group, LLC (Naples, FL) acted as financial advisor and Davis Wright Tremaine, LLP (Seattle, WA) acted as legal advisor to Sumitomo Forestry America, Inc. on this transaction.
What the deal means
First, here's a report from the Nikkei Asian Review on the deal, which notes that the investment in Dan Ryan Builders came to $83.3 million, for a 60% equity stake in the company.
Sumitomo, Japan's fourth-largest builder domestically, earlier did deals in Seattle, Dallas, with stakes in MainVue and Bloomfield Homes, and further, into Gehan Homes' footprint of Houston, Dallas, Austin, San Antonio, and, more recently, Phoenix.
The Nikkei Asian Review notes:
Sumitomo Forestry is seen selling 2,500 homes in the U.S. this fiscal year, but aims to double the number in three years. It is making headway in Australia as well. It plans to sell 8,000 homes in the two markets by fiscal 2018, a 70% increase from fiscal 2015 estimates.
"Companies with cash are looking for investment opportunities in the U.S. real estate, where the money will do far better in returns than can be achieved in the Japanese or Chinese economy right now," said Tony Avila, a principal at San Francisco-based Builder Advisor Group.
What these investments mean for operators like Dan Ryan, Tim Gehan, Bloomfield's Don Dykstra, etc. is a capital infusion that will allow them to put resources to work on a "level playing field" with big public competitors, both within their current operating arenas, and in new expansion markets.
"We'll be able now to go head-to-head with some of those larger players in our markets," Dan Ryan tells me.