HOVNANIAN ENTERPRISES SLID INTO YET another Florida market when it recently purchased First Home Builders of Florida for an undisclosed price. With First Home Builders being a leading builder in Western Florida, Hovnanian gains the No. 1 market position in the burgeoning Fort Myers-Cape Coral market, which is the 18th largest housing market based on 2004 permits.
Tony Avila, a managing director with JMP Securities who worked on behalf of the seller, says that although Technical Olympic USA's acquisition of Transeastern Homes has somewhat overshadowed the deal, the transaction still ranks as one of the most significant in recent years. After all, “they weren't buying a fixer-upper,” Avila says of Hovnanian's purchase.
The backbone of First Home Builders' success has been its focus on first-time home buyers; its unique mortgage financing strategies, including rent-to-own and credit empowerment programs; and its vertically integrated structure, which controls production quality and timing. Last year, the builder delivered 1,819 homes with revenues of $308 million, according to BUILDER magazine.
In March Hovnanian became aggressive in Florida, acquiring Cambridge Homes' operations in Orlando and Town and Country Homes' business in West Palm Beach, Boca Raton, and Fort Lauderdale.
Because Hovnanian tends to take a hands-off approach to managing its acquisitions, Avila says that “Hovnanian is beginning to be recognized as a ‘preferred acquirer' among private home builders.”
This status benefits both companies because Hovnanian accesses a new market and strong revenue stream and First Home Builders retains the bulk of its talent.