His company, Lombardo Homes in southeastern Michigan, announced Monday that it would purchase the Detroit land previously owned by Centex Homes, which decided this year to leave the Michigan market. The acquisition brings 490 lots in 14 communities to Lombardo, which was one of the nation's 150 largest builders with 301 closings in 2007, according to BUILDER's annual Builder 100 list. Excluding the Centex lots, Lombardo projects closing 170 homes in 2008.
Terms were not disclosed for the deal, but Lombardo, who spoke with BUILDER this week, said the agreed-upon price was "good for both sides." The acquisition will allow Lombardo, which has reduced staff by about 30 percent over the past two years, to hire 12 to 15 employees, and grow share in its market as conditions improve.
Of course, Michigan is not exactly a vibrant market today. The state has been hit hard by the economic downturn and is struggling with large numbers of foreclosures. But private builders have said before that the Michigan market has more buyers than public builders may think. "With this acquisition, we can compete with the foreclosures," Lombardo told BUILDER. "We are new construction, and we have a warranty."
But he also remained conservative in his plans for the Centex lots, which he anticipates will be slowly absorbed over the next 18 months. "We based our pro forma on a 2010 turnaround," he said. "We tried to address that risk."
Alison Rice is senior editor, online, at BUILDER magazine.
Learn more about markets featured in this article: Detroit, MI.