Tri Pointe Homes, the three-year-old builder, is expanding beyond its base in California for the first time into Greater Denver, where its goal is to be among that market's top 10 builders within five years, says Tri Pointe's CEO Doug Bauer.
Last month, Irvine, Calif.-based Tri Pointe hired 41-year-old Matt Osborn to run its Colorado operations. Osborn had been president of another local builder, Village Homes, where he’s worked since July 2000 and was its president for the past 3½ years. Village Homes had been the Osborn family’s business until it filed for court protection from creditors in late 2008, and then sold two-thirds of its assets to the Homebuilder Capital Solution affiliate of Colorado and Santa Fe Real Estate.
"It was a difficult decision [to leave Village Homes] in terms of my family history," says Osborn. "But life is about timing. When I got the call from Doug and met with Tri Pointe’s people, it felt comfortable and at home. And what Tri Pointe is doing was a cultural fit."
Bauer tells Builder that he started looking at the Denver market as a possible expansion opportunity about 18 months ago, when Tri Pointe and its financial partner, the investment firm Starwood Capital, were interested in acquiring the Arizona-based builder Taylor Morrison, which builds in Colorado.
While it lost that acquisition bid to a limited partnership of three investment firms, Tri Pointe was still restless. Since launching in 2009, the company has opened nine communities in Southern and Northern California, where it now controls more than 1,500 lots. Bauer says that Tri Pointe’s long-range goal is to become a regional builder, and he’s looked "from Texas west" in his search for new terrains to conquer.
He says he likes Denver’s lifestyle and job growth. And it so happens that Starwood owns land in Denver, which it could make available to Tri Pointe at market-rate prices. (When he spoke to Builder on Tuesday, Bauer says his company was also considering an acquisition to break into Denver. "The organic approach [to growth] guarantees profitability, while an acquisition gives you more rapid growth. The problem, though, is that it’s challenging to see what’s under the hood" of another builder.)
Within the next 45 days, Tri Pointe expects to find permanent office space for its Colorado division. And it hopes to have a few models on the ground in greater Denver by late 2012 or early 2013 to capitalize on next spring’s selling season. (Bauer says his company recently signed a letter of intent to buy its first piece of land in metro Denver.)
Bauer and Osborn say they will develop detached house plans that conform to what local customers want, and will price their houses in Colorado within $350,000 and $400,000, which is where Tri Pointe’s homes in California start. Tri Pointe will also look for rezoning opportunities, particularly in neighborhoods where inventories of new homes are low.
Tri Pointe closed 104 homes last year, and is on track to close between 130 and 140 in 2012. Next year, it plans to open at least four new communities in Mountain View, San Mateo, La Habra, and Mission Viejo, Calif., along with its first communities in Colorado, which might include construction in Fort Collins and Colorado Springs. Tri Pointe’s goal, says Bauer, is to be closing between 350 and 400 homes in the Denver market within the next five years, "which would definitely put us within the top 10 builders in that market."
And while he has no desire for his company to become a national builder, Bauer says that Tri Pointe Homes continues to evaluate longer-range expansion and acquisition possibilities in Texas, Arizona, Nevada, and the Pacific Northwest.
John Caulfield is senior editor for Builder magazine.