The Ryland Group continues to be one of the industry’s more aggressive consolidators. Last Friday, the Westlake Village, Calif.-based company announced that it had acquired the operations and assets of Media, Pa.-based Cornell Homes, which ranked 139th nationwide among builders in closings for 2012, when Cornell generated $55 million in revenue from 180 closings, according to BUILDER research.
The Cornell Homes purchase marks Ryland’s fourth home builder acquisition since July 2012, when it acquired Timberstone Homes in North Carolina. Its other acquisitions during that period included Trend Homes in Phoenix last December and LionsGate Homes in Dallas last month.
Greg Lingo, a former NVR executive who is Cornell Homes’ founder and CEO, is staying on as president of Ryland’s new division in Philadelphia, where Cornell Homes ranked third in closings behind NVR and Toll Brothers on BUILDER's Local Leaders list for that year.
He tells BUILDER that while Cornell had received offers from other builders to sell, he saw Ryland Homes as “the perfect partner” with a decentralized business model “that leverages the know-how of the local operator.” (The Philadelphia division will report to Alan Goldsticker, who recently was promoted to Ryland’s area president in Indianapolis.)
Lingo also chose Ryland because it gave him assurances that Cornell’s employees, who number just under 40, would be “maintained” after the acquisition.
Communities in Three States
Cornell Homes has 12 active communities and 1,716 lots in Philadelphia, western New Jersey and Delaware. Lingo says that while he sees opportunities to expand Cornell Homes’ market radius “slightly,” it’s more likely that his company as part of Ryland will focus on increasing its penetration into existing markets.
“While Philadelphia is a new market for Ryland, the company already has operations on Baltimore, so it is somewhat of a natural geographic expansion in our view,” wrote Adam Rudiger, a senior analyst with Wells Fargo.
While the pace of Ryland’s acquisitions could expose the builder to “unknown risks,” Rudiger also thought these acquisitions “give the company an immediate revenue stream, without the upfront costs that would come with expanding organically.”
BUILDER named Ryland Homes its fastest-growing public builder in 2012, during which Ryland’s closings increased 41% to 4,809 units.
John Caulfield is a senior editor for BUILDER.