John Wieland Homes and Neighborhoods, which has been building houses in the southeastern U.S. since 1970, has sold its assets and intellectual property to the private equity firm Wheelock Street Capital for an undisclosed amount.
In a deal that’s been in the works since June, the Wieland family and Wheelock, which is based in Greenwich, Conn., have formed a partnership into which Wheelock will deploy “significant new capital resources” for growth. John Wieland, the builder’s 75-year-old founder and CEO, will serve as chairman of this venture.
Keith Bass, who ran Ryland Homes’ Southeast Region for four years through last January, joins Wieland Homes as its chief operating officer. But don’t expect Wieland to be riding into the sunset any time soon. “John’s name is still on the door, and we want him to focus on the vision for the company, and on architecture,” says Dan Green, a principal with Wheelock.
Green adds that Wheelock evaluated several builders prior to this transaction, and decided that Wieland Homes had “everything we were looking for” in terms of operations, brand, history, and its real estate portfolio, which includes about 300 homes and more than 5,000 lots.
In an interview with Builder on Friday, Wieland joked that he can’t retire because “my wife doesn’t want me home.” And he’s not ready yet to walk away from a job “I’ve been doing for 42 years, and what I do well.”
The timing of this partnership coincides with the healthier environment in which housing now finds itself. Wieland notes that his company enjoyed a 30% increase in sales for the fiscal year that ended Sept. 30. “The industry is recovering. We have the right management and the right product. But we needed cash to take full advantage of the market’s upside.”
Green declined to disclose Wheelock’s investment in Wieland Homes except to say that it is earmarked for land acquisition and development, and is larger than previous investments Wheelock has made in other homebuilders’ operations.
Since being formed in 2008, Wheelock has methodically expanded its investments in residential real estate. In 2010, it formed a partnership with McGuyer Homebuilders (MHI) to acquire 3,000 home sites in Texas for $15 million. Last January, Green told Builder that his company had accumulated nearly 3,800 acres through four land-purchase deals over the previous 14 months, including its acquisition of PulteGroup’s Anthem Ranch and Anthem Highlands in Bloomfield, Colo. At the time, Green indicated that Wheelock was looking for opportunities in the Virginia/District of Columbia area, the Carolinas, Florida, Texas, Arizona, and California.
Smyrna, Ga.-based John Wieland Homes and Neighborhoods builds in the Atlanta, Nashville, Tenn., Raleigh, N.C., Charlotte, N.C., Charleston, S.C., and Montgomery, Ala., markets. Over the past few years, the company, through a business entity called Wieland Communities, has survived the housing recession by building out troubled communities for banks that took them over in foreclosure proceedings. Even during the downturn, Wieland remained one of the industry’s larger privately owned builders, and has maintained a reputation for quality construction and architectural innovation.
Wieland notes that bank-workout opportunities are dwindling, so “we’re going to have to make our money the old fashioned way again, by developing land and selling homes.” And his staff is excited, he says, because “we’ll be able to meet the demand that’s out there.” He confirms that Wieland Homes intends to accelerate its construction activities, and Wieland believes there are still growth opportunities in the builder’s existing markets.
During his four decades as a home builder, Wieland—whose “office” when he started the company was a Volkswagon Beetle—has witnessed just about every trend and fluctuation in housing demand imaginable. “I think the buyer is much more practical than [he] used to be and much more focused on value and less focused on the extras,” Wieland told the Atlanta Journal-Constitution in a 2011 interview. He observed a shift in American values toward fundamentals. “We are saving money. We don’t want to go deeply in debt to buy a home. One of our major thrusts right now is urban infill and there is much more appreciation for being close to the city and much less appreciation for the yard that you have to maintain and pay taxes on.”
In a late February interview with Builder, Wieland admitted that the housing recession, for all of its pain, actually made his company stronger because “it helped us understand what we’re really good at … and forced us to become a value-added, as opposed to a volume-added, business.”
John Caulfield is senior editor forBuilder magazine.