Amid the noise, nonsense, and no-win brinksmanship of Capitol Hill's hugely sad game of chicken, and after the Federal Reserve's head-fake on tapering the program that's making money so inexpensive for big-time users of capital, it's a wonder deals any are still getting done in home building's landscape, but word is they are.
A way to characterize the current leg of "it-could-go-either-way" recovery is to say that well-capitalized home builders are using their heft to lock in optionality on land and on talent, right now. Less-than well-capitalized home builders can only watch, wait, and hope that their painstakingly-engineered access to lots and talent somehow remain off the radar of the voracious, cash-paying big publics.
As the bumpy, lumpy, on-again, off-again engine of recovery chugs forward, it's clear that home building's version of natural selection will pick some of these privates for survival, some for deselection, some for absorption into an acquirer, and some for a move into league with the bigger set.
If a private home builder can prove to capital stake holders that it has an iterative, sustainable, resilient, and scalable system, like as not--even in these tightened, more risk-averse, uncertain days--it's got a shot of landing a deal for big time capital access.
This, we hear, is what's in store for Paul Corley and his team at Edward Andrews Homes, a long-time Atlanta area player in land development, whose plan is to fast-track his way from operations in five communities into contention as top 10 builder in the market via a big-time private-equity infusion from The Carlyle Group.
Here's verbiage from a soon-to-be-released press statement from the principals in the deal:
Edward Andrews Homes (EAH), a single family home builder and land developer based in Atlanta, Georgia, has formed a strategic joint venture with the U.S. real estate arm of The Carlyle Group, a global alternative asset manager, to purchase and develop residential land as well as construct and sell single family homes in the $300,000 to $1,000,000 range.
EAH was formed in 2009 to take advantage of dislocation in Atlanta’s residential real estate market. The newly-formed strategic venture with Carlyle allows EAH to acquire land and lots to continue to grow market share in the recovering Atlanta market, with potential for expansion to additional high-growth metros in the southeast. The venture expects to focus on high-income, supply-constrained submarkets on Atlanta’s north side and making good use of the principals’ zoning and development expertise. Owners Paul Corley and Todd Hager have 40 years of land development and home building experience and have formed a team with some of the industry’s top management talent.
The Carlyle Group, a global alternative asset manager with $180 billion of assets under management, $8 billion of which is dedicated to real estate in North America. Carlyle’s U.S. real estate team makes opportunistic investments in major metropolitan markets, primarily in the residential, hotel, industrial, office, and retail sectors.
Rob Stuckey, Carlyle Managing Director and Head of the U.S. real estate team, said, “A lack of residential development financing has created an opportunity for a well-capitalized builder to acquire land and lots at attractive prices and invest in Atlanta’s strong housing market. We are enthusiastic to partner with a company that has such a compelling business model and growth potential.”
“We are excited about the partnership and believe that a strong capital partner will help EAH achieve the growth, innovation and value needed to become the premier builder in Atlanta,” said Paul Corley.
Tony Avila of Builder Advisor Group served as financial advisor to Edward Andrews in connection with the transaction.
Corely's pedigree and chops are in the area of land deals and a product positioning aimed for the market's resurgent upscale, jobs-driven housing market. Hager focuses on construction implementation.
His website's bio says:
He employs his expertise as one of the area’s most successful residential developers to assess the opportunities available in today’s markets and leverage the contacts that will maximize profit for Edward Andrews Homes and its investors, bankers, contractors and other partners.