D.R. Horton has bought the home building operations of Breland Homes, the 38th largest builder in the country, it announced Wednesday.
With the purchase Horton gains access to two new markets, Huntsville, Ala., and coastal Mississippi, and solidifies its dominance in Alabama's Mobile and Baldwin counties. Horton now has operations in 75 markets in 26 states.
Breland closed 684 homes last year for $130 million in revenue, according to the 2011 BUILDER 100 list.
The purchase price was not released but it included approximately 320 homes in inventory and 1,020 finished lots. It also hands over control of another 3,700 lots Breland holds through option contracts. Breland’s average home sale price was $200,000 and average home size was 2,200 square feet, Horton said.
Last year the Fort Worth, Texas–based Horton delivered more homes than any other builder in the United States. In the 12 months ending in June it delivered 18,302 homes ranging in price from $90,000 to more than $600,000.
“We are proud of the reputation that we have built for Breland Homes over the past 30 years, and we are delighted to become a part of D.R. Horton,” company founder Louis Breland said in the announcement of the sale
Analysts also reacted favorably to the deal. “While we don't suspect these will be the fastest growing markets in a recovery, we note that public builder competition is almost non-existent in these markets, which should afford DHI a competitive advantage relative to smaller peers,” wrote Adam Rudiger, senior analyst for Wells Fargo Securities. “This deal almost doubles DHI's communities in the region and provides a critical mass from which to leverage its existing operating costs, which we view favorably. “
“While no specifics regarding the terms of the deal (were released), we like the transaction from a geographic perspective as we see the Gulf Coast containing significant growth potential over time. Huntsville, of course, is home to NASA operations,” wrote Stephen East, senior managing director at ISI Homebuilding Research.
Teresa Burney is a senior editor for Builder magazine.