In a
deal that’s expected to close in the first quarter of 2016, PulteGroup
announced its acquisition of Atlanta-based John Wieland Homes and Neighborhoods
for approximately
As part of the transaction,
John Wieland Homes
Former PulteGroup
executive Greg Huff took over as John Wieland Homes CEO earlier this year. The
builder known for producing high-end, luxury homes was sold to a joint venture formed by the Wieland family and Greenwich,
Conn.-based real estate investment firm Wheelock Street Capital in 2012. Wieland delivered
approximately 565 homes at an average selling price of
“With population growth and housing demand in the Southeast expected to remain strong for years to come,” PulteGroup spokeswoman Valerie Dolenga says, “our acquisition of the John Wieland Homes and Neighborhoods brand and its robust land pipeline provides a great opportunity to increase our market share and operating leverage in five important cities, while expanding our presence in the luxury segment.”
She adds that the Wieland brand name is well-known in the Southeast and is expected to be maintained.
Eugene James, regional director of Metrostudy Atlanta and Nashville, says that Wieland is well regarded in the southeast and has marveled at its ability to deliver the amount of homes it does each year at an above-average selling price. “Because of their price point,” he says, “you don’t expect to sell that many homes in that price range, yet John Wieland has managed to do so and that’s directly because of their reputation.”
James says he was anticipating a deal involving Wieland but was unsure of the other party or when it would take place. “Now that the market has rebounded nicely,” he says, “it would make sense to sell now rather than earlier. And why wait since property values have climbed back close to or beyond where they’ve been in the past?”
J.P. Morgan’s Michael Rehaut says the deal is consistent with the trend over the last few years of public builders acquiring small to mid-sized privates as part of a broader industry consolidation. In an analyst note, he rates the deal as neutral, citing some near term upside given Wieland’s attractive valuation relative to its larger-cap peers, but “at the same time we point to our outlook for below average order growth to persist as well as its above mid-cycle gross margins.”
For PulteGroup,
the acquisition is consistent with its stated strategy of investing in high-return projects that will allow the company to grow with the market over
time, says Dolenga. “For now, we are focused on integrating the Wieland assets
into our existing operations and making sure this is a seamless process for
customers and employees,” she says.
