The Ryland Group has an agreement to buy LionsGate Homes in Dallas/Ft. Worth market, its third builder acquisition in 11 months, if it closes.
The purchase will give Ryland access to 885 lots in 15 active communities in Dallas/Ft. Worth, a market Ryland exited (along with Jacksonville, Fla.) in August 2011.
“It was a much different world back then,” said Drew Mackintosh, the builder’s vice president of investor relations and corporate communications. “At the time, it was under-performing for the company; and also at the time, we only had so much money to go around to our divisions, so we reallocated capital to areas that were performing better. … I think we always had our eye on returning.”
Buying another builder will give Ryland a good foothold and head start in the extremely competitive market, he said. Because the deal has not closed, Mackintosh would not comment on whether LionsGate’s current management will remain in place.
Mackintosh said he was not sure who approached who suggesting the purchase. However, in the wake of Ryland's recent purchases of two other builders—Timberstone Homes in Charlotte and Raleigh, N.C. in July of 2012, and Trend Homes in Phoenix in December of 2012—other small builders have been approaching Ryland about purchasing opportunities, he said.
“We have a track record of getting [the deal] to the finish line,” Mackintosh said.
Despite having made it through the recession, many small builders are still having trouble getting the financing to buy land to grow their businesses. That’s not a problem for the large publicly held builders with their superior access to low-cost capital.
“In general, the small builders are still finding it tough to find capital,” Mackintosh said. “And there are a lot of hoops they have to jump through that make the business of buying land more difficult for them.”
There could be more builder purchases to come for Ryland.
“We are always looking for other opportunities,” he said. “We are growing land.”
Teresa Burney is a senior editor at Builder.