For $15 million (and an earn-out based on home closings and the timing of such closings through December 31, 2017), LGI received approximately 150 homes under construction and approximately 1,000 owned and controlled lots that will be available for future sales as the company expands operations in Charlotte. So far, this year, Oakmont has sold 162 homes this year and 230 homes last year. In 2013, it controlled 2.94 percent of the market, ranking it 11th, and in 2014 it controlled 2.87 percent of the Charlotte market, ranking it 12th.
Interestingly, this is LGI's first step into a hyperactive mergers and acquisitions arena among home building's larger and smaller volume building firms. Now that pent-up demand in the second-move up, active adult, and luxury tiers of the market seems to have leveled off or even begun to recede, home builders are gearing up for a more forceful push into lower price tiers, where entry-level buyers have yet to materialize as significant participants in the housing recovery. To do that, home builders like D.R. Horton, PulteGroup, and now LGI are consolidating marketshare in their operational arenas so that they can scale up in volume even as they trade off some of the margin they'd achieve on higher-end homes.
“This is an opportunistic purchase for LGI Homes, comprised of homes in various states of construction, lots, and land under development covering a large portion of this market,” said Eric Lipar, LGI’s chairman and CEO in a press release. “The acquisition of Oakmont Home
Builders provides us with a valuable asset position in the strong and growing Charlotte market.”
As a marriage, Oakmont, which was ran by Charlotte homebuilding veteran Judson Stringfellow and LGI make sense. Bill Miley, director of the Charlotte Market for Metrostudy, says Stringfellow had a knack for finding inexpensive lots in subdivisions and building efficiently.
So far this year, Oakmont’s average closing price is $140,437. Last year, its average closing price was $118,790 “They are clearly in the $100,000 to $150,000 price range,” Miley says. “That’s their niche and they do it very well. There are only a couple of companies in Charlotte who play in that [price] range.”