Looking to strengthen its odds of building clout in Phoenix, the nation's fastest-growing-city, Landsea Homes--the U.S. operator of Nanjing, China-based Landsea Green Group Company, Ltd.--has acquired Pinnacle West Homes, a below-the-radar player that would catapult Landsea into the market's top 25 rankings within a year.
While considerable focus has drawn to three Japan-based enterprises--Daiwa House, Sekisui House, and Sumitomo North American Forestry--who've moved aggressively into the U.S. through a series of a dozen or so private home building operator acquisitions in the past five years, Landsea has methodically been expanding its American beachhead as well.
The Pinnacle West Homes acquisition--a quantum leap growth spurt from de nova operations Landsea established in Phoenix in 2018, comes at a moment in the housing cycle where opportunistic acquirers may find more willing sellers, especially if the latter may be looking for an exit plan in advance of a surge in late-cycle challenges thought to be coming sooner or later.
"Pinnacle West works particularly well for us, because we were looking for opportunity to penetrate deeper into the entry-level price point here in Phoenix, where they've got the relationships and the reputation with masterplanned community developers to offer products for that customer segment," says Landsea Homes coo Mike Forsum. "They know how to do entry-level at a high-value, at price points in the $250s to $300s, and their operational model and cost-efficient processes are best-of-breed," Forsum says of the Pinnacle West team.
Forsum adds that, although Landsea's current operating footprint concentrates primarily in gateway cities on the east (Boston, New York, New Jersey) and West (Silicon Valley, Los Angeles, and Orange County), Phoenix and other U.S. markets qualify as attractive markets for expansion in the months and years ahead for a company who looks at the U.S. as a core, long-term strategic growth opportunity.
"We're going to continue to look to expand the company in terms of market reach, and impact," says Forsum. "We want to do it thoughtfully. We know this is a business of scale. The things you buy--land, materials, skilled labor--you can buy smarter when you're not a small, boutique operator. We know we have to have a certain presence in markets to get those operating efficiency opportunities, and we have backing from an enormous, well-capitalized international parent to gain that kind of presence."
Here's details from Landsea's press statement, due out Monday:
Landsea Homes, a leading homebuilder of vibrant master-planned communities in prime locations, announced it has acquired Pinnacle West Homes, a Phoenix-Mesa-based developer providing unique, value-based single-family homes in 15 Phoenix-area communities.
As part of the acquisition, Landsea Homes acquired 15 communities in four areas, and more than 1,150 total lots.
“We are very pleased to have Pinnacle West Homes join the Landsea Homes family,” said John Ho, chief executive officer, Landsea Homes. “Their experienced and dedicated team and well-established building operations are a great addition as Pete Beucke continues to enhance our homebuilding team and we provide high-quality and high-performance homes to the dynamic and growing Phoenix area.”
Last year, Landsea Homes purchased land in Chandler for its first community in Arizona. The new community, Sonora Crossing, includes 78 single-family homesites with resort-style amenities and expansive open space. Land development started in Fall 2018 and the first closings are expected in late 2019.
The company further expanded with the acquisition of 90 single-family homesites at Harvest Queen Creek, the homebuilder’s second community in greater Phoenix. Land development is expected to begin in early 2020, and the first closings are anticipated later that year.
“This is a very exciting time for Landsea Homes in Arizona,” said Pete Beucke, president, Landsea Homes, Arizona division. “Job growth and a strong economy, in-migration and growing demand from millennials combined with a limited supply of inventory have created a great opportunity for us to showcase our best-in-class modern homes, pioneering commitment to sustainability and inspired spaces and features that connect seamlessly with the area for the Phoenix homebuyer.”
Phoenix is the fastest-growing city in the country, according to newly released estimates from the U.S. Census Bureau. Arizona was the fourth fastest-growing among all U.S. states and Maricopa County – which is home to metropolitan Phoenix – was the fastest-growing county. Growth like that is expected to continue for the foreseeable future because of the strong job market and the state’s booming economy. According to projections from the Office of Economic Opportunity, the number of jobs in Arizona is expected to increase steadily during the next two years from the likes of big tech firms and other industries such as manufacturing.
Arizona continues to prove itself as a prime location to live, raise a family and retire with its quality of life, growing economy, relative affordability, low healthcare costs, below-average taxes, abundance of new jobs and premier school districts.
With Landsea Homes’ experience gained at both Sonora Crossing and Harvest Queen Creek, the homebuilder is committed to designing and building vibrant, new master-planned communities that meet all the needs of local homebuyers.
“Aligning Pinnacle West Homes with Landsea Homes brings together the expertise of two great homebuilding companies to further drive innovation and deliver best-in-class homes,” said Todd Tucker, president, Pinnacle West Homes. “Landsea Homes is a well-respected homebuilder that shares a common goal of building a more sustainable future and we’re looking forward to accelerating progress toward achieving this mission.”
Pinnacle West Homes provides unique, value-based single-family homes and currently builds in 15 Phoenix-area communities, all of which will transition to Landsea Homes in June. The company boasts deep roots in the Valley of the Sun, gathering a team with over 85 years of combined homebuilding experience.
