Although a relative feather-weight next to the Hortons, Pultes, and Lennars of the publicly traded circuit, Comstock Homebuilding Cos. is no less aggressive about expansion.
The company recently purchased Parker Chandler Homes, a 50-homes-a-year builder outside Atlanta, for an undisclosed price. The acquisition not only gives Comstock a presence—albeit a small one—in the ultra-competitive Atlanta market, but also expands their operations into Charlotte, N.C., and Myrtle Beach, S.C.
CFO Bruce Labovitz says with 1,600 lots on its books, a decent backlog, and a good number of projects in the pipeline, Parker Chandler should contribute $75 million to overall revenues in 2006—two to three times Parker Chandler's current haul.
However, with pre-tax margins in the Atlanta market in the single digits and Parker Chandler's small size, industry naysayers question whether the move is as strategic as Labovitz anticipates. But Labovitz remains confident: “Every market is tough to make money in. … You have to buy good operators with good land position. It would be impractical to show up in a market de novo.”
Tapping Comstock's experience in mixed-use, infill, and multifamily development, Parker Chandler, says Labovitz, will be able to bring new products to market and “expand the definition of what they do from just being a home builder to be a developer.”
And according to Labovitz, this simultaneous expansion into three markets is just the tip of the iceberg. “Our overall near-term strategy is to expand geographically into the Southeast. Our goal is to do that through acquisition,” he says. “This [deal] is the first in what we hope to be a series of acquisitions.”