Back in 2014, when the home building mergers and acquisitions environment was heating up, Alan Laing, CEO of Orleans Homes, and the company’s owners, Strategic Value Partners of Greenwich, Conn. and Anchorage Capital, New York, flirted with the idea of selling the Bensalem, Penn.,-based builder. When they couldn’t get the valuation that they wanted, they pulled back and recommitted to a far-reaching three-year turnaround plan last Fall.
The company essentially revitalized its operations in a couple of key markets by reallocating capital into Chicago and the Carolinas, adding new division presidents in Raleigh and Charlotte, and tying up longer-term land parcels. Additionally, it focused on improving cycle times, great quality, and great customer service.
“Our core operating metrics have gotten better,” Laing said in an April interview.
But as that was playing out, Laing knew the company’s owners would put Orleans on the block again.
“With my ownership group, they don’t buy these businesses to hold for 20 years,” he said. “We organized the company around being here for the next two to three years and preparing the company to be the best it could be, assuming the market will reward us for our efforts at that point.”
While it may have been earlier than expected, today’s announcement that Scottsdale, Ariz.,-based public builder Taylor Morrison Home Corp. bought the Charlotte, Raleigh and Chicago operations and home building assets of Orleans Homes for $166 million, shows that the market did indeed value the company.
The Charlotte, Raleigh, and Chicago businesses currently represent more than half of the Orleans Homes portfolio and consist of 24 communities and approximately 2,100 owned and controlled lots. The acquired businesses will transition to the Taylor Morrison brand over the coming months.
The remaining Orleans divisions will continue to operate under the ownership of Orleans Homes. The once-public company was hit hard from the recession, emerging from bankruptcy under George Casey in 2011. Some observers wouldn't be surprised if they sold remaining lots positions in Philadelphia, New Jersey, and New York to other other builders and quietly exited the business.
“We are so pleased to welcome these Orleans team members into the Taylor Morrison family," said Taylor Morrison President and CEO, Sheryl Palmer, in today’s news release. "Consistent with our focus on building quality homes in core locations, these Orleans businesses are in high-growth areas where consumers want to live, aligning with our strategic priorities. Together, we'll be able to expand on the Orleans platform and enhance its reach within these specific markets, while at the same time diversifying our consumer base. Today's announcement further supports Taylor Morrison's strategy to grow our U.S. footprint."
In the same release, Laing commented that Taylor Morrison was an excellent fit because of their “great culture, strong leadership team and solid business.” But geography played a role as well.
“The biggest population of buyers will be the public buyers,” Laing said in April. “Obviously we will aim at out of market, West Coast-based enterprise.”