Sumitomo Forestry America, one of a trio of Japan-based global conglomerates with deep roots and big-time plans for a presence in North America, has aligned and integrated its Middle Atlantic and Southeastern U.S. play under top 10 private home builder Dan Ryan Builders.
The move, which consolidates Sumitomo's Crescent Communities home building business--operating under the Fielding Homes brand in the Carolinas--into the steadily growing footprint of Dan Ryan Builders, gives DRB entree as a brand for the first time into the hot Charlotte market.
What's more, the move now gives Dan Ryan Builders both a capital infusion and a growing young brand, designed for masterplanned community appeal to flesh out its portfolio, add incremental volume, and not add significant overheads to its business.
Most opportune of all, Fielding Homes comes with land and lots of it, as we've reported here.
"The company’s Fielding Homes single family home building business includes over 1,700 single family lots across 6 communities in Charlotte and Raleigh-Durham, North Carolina."
Now, with a three-pronged brand line-up--Dan Ryan Builders, Elevate Homes, aimed at a growing attainable 55-plus demand pool, and Fielding Homes, created to align with Crescent Communities' masterplans--this Frederick-MD, based operator's growth as as a deep-scaled eastern seaboard power house is practically assured. Clout with local suppliers and trades, land sellers, and three price- and life-stage tiers of customer segments gives Dan Ryan Builders the kind of capital nimbleness, market-presence, and heft only public builders enjoy in the ever more competitive Southeastern U.S. landscape.
Dan Ryan, the company's founder in 1990 and current CEO, was always fond of quipping that his little firm had to be a nimble "counter-puncher" to Goliaths in the market like NVR, where he'd worked for years at a company started by his Uncle Ed. Ryan plans to retire at the end of 2018, passing the baton to his appointed successor Ronny Salameh, and leaving a legacy of a 28-year-old builder that has become nearly every bit the powerful, deep-pocketed, operationally-excellent organization he once referred to as Goliath.
A statement about the integration of Fielding Homes into DRB notes:
“After spending several months getting to know the team and business, we couldn’t be more pleased to welcome Fielding Homes and its talented leadership team and employees into the Dan Ryan Builders family,” said Ronny Salameh, president and chief operating officer of DRB Group, who will step into the CEO role in January when founder Dan Ryan retires. “We look forward to capitalizing on the many opportunities to expand our existing brands into the Carolinas, while introducing the well-respected Fielding Homes brand into our southern markets.”
The addition of the Fielding Homes footprint also marks Dan Ryan Builders’ entry into the Charlotte-area for the first time, where Fielding Homes has three active communities, Masons Bend in Fort Mill, South Carolina, Paddlers Cove in Lake Wylie, South Carolina, and Chapel Cove, in sought-after Southwest Charlotte. In the Raleigh market, Fielding Homes has two active communities, Forest Ridge and Trinity Creek. The Raleigh-area communities will operate under the leadership of Raleigh division president, Jay Lewis. Dan Ryan Builders is the largest private builder and third largest builder overall in the Raleigh market and Fielding Homes will expand its already sizeable footprint.
Scott Widener, who led the creation and launch of Fielding Homes and was instrumental to the brand’s early success, will continue to lead operations in Charlotte as division president for Dan Ryan Builders. He added, “We are excited for the opportunities as a combined organization in the Carolinas. The multi-brand platform will enable us to reach more potential homebuyers with a range of products that will enable further growth and success in the Charlotte market. We are proud to be part of the Dan Ryan Builders family and to build on our accomplishments in the Carolinas.”
Meanwhile, Sumitomo's integration of the home building operator Fielding into Dan Ryan Builders makes portfolio-management sense, as it continues a stated strategy to become a top 10 national home building enterprise by 2021, with total annual closings across its home building brands of 5,000 or more. What's more, by adding the Crescent Communities 9-state empire of masterplanned communities, commercial, mixed-use, and multifamily neighborhoods this past year, Sumitomo calibrated its business model and real estate cycle-diversity.
The three Japanese companies who have made the biggest impression in the single-family home building business community in the U.S.--Sumitomo, Sekisui House, and Daiwa House--draw from deep wells of experience as multi-faceted, vertically integrated organizations, longterm strategic thinking, and less costly capital.
Sumitomo's acquisition of Crescent Communities land assets and development machinery across the nation roughly parallels both the Sekisui House combination with Newland Communites, and D.R. Horton's 2017 acquisition of 75% publically-traded Forestar. Lennar's continued portolio initiatives also focus on delevering its land and real estate exposure even as it creates structural ventures that secure its access to land and lots on more of a just-in-time basis.
Sumitomo's Northwest, Utah, Texas, Mid-Atlantic, and Southeast home builder portfolio--reminiscent of the quilt-work of operators Tri Pointe Group acquired from Weyerhaeuser in mid-2014 for $2.8 billion, is--by the numbers--closing in on its 5,000 home a year goal-line, from both acquisition and organic growth. Pairing Crescent's ongoing masterplanned community development and deep roots with land sellers with its multi-regional, multi-economy builder group, Sumitomo has established a strong beachhead for both growth in its home building and residential development operations, as well as its other strategic strength, forestry and building materials.
Its North American business development group acquired wooden cabinet manufacturing and sales specialist, Canyon Creek in 2011, creating an operational and infrastructural pivot around further vertical integration opportunity. Sumitomo has said:
Moving forward, Canyon Creek will strengthen its business in North America through expanding into the manufacture of other types of building materials and timber products, and increasing the areas where it supplies cabinets.
Vertically integrated, business-cycle diversified, scaled, leaner and more automated, and superior quality--in terms of structural performance, reduced waste, more resilience, and construction velocity--a hallmark of Japan-based home building, development, and investment strategies evolved over not just decades, but centuries, is no longer the future. It's here.
And Dan Ryan, once passed over for a promotion during his years working for Ryan Homes back in the late 1980s--and encouraged by his father, Ryland Homes founder Jim Ryan, to pick himself up by his bootstraps and be the leader he truly was--gets ready to leave a legacy that exponentially eclipses his wildest hopes of accomplishment as a member of the NVR team. He hands over a company capable of muscling head-to-head with any competitor in today's home building firmament, with the fire-in-the-belly passion of a private home builder to the end.