Photo: Bob Mahoney God didn't create all distressed residential real estate deals equal. Plenty of them involve ranches, farms, estates, fields, forests, and glens that Google Maps to the path of most certain growth, but whose time-release mechanisms are set to trigger later than once assumed. Most certain growth, it seems, checked up at least temporarily amidst a series of aftershocks of a heretofore jobless recovery from the Great Recession.

Their day will come, but not soon.

Others are tracts seemingly born and bred to transact in 2011 or 2012, bittersweet harbingers, perhaps, of worse days past and better ones to come. These deals, their participants believe, may prime the pump for more trades in months ahead. Their moment is now, and the best and brightest of these near-term distressed land deals must serve two functions. First, they will represent the industry's initial best hope to expand a measly trickle of 325,000 or so new-home sales in 2010, into something more suggestive of a stream of 350,000 or more this year.

At the same time, these few and far between diamonds-in-the-rough distressed deals will redound directly to organizations who buy them. As a direct consequence of being successful acquirers, such companies will grow disproportionately, even amidst a torturously anemic frontline advance for home building as a sector.

Exactly one type of firm will take part in this type of accelerated recovery program: a company that knows such a deal when it sees it, and has the intestinal fortitude, the trove of cash, and the agility and will to strike first, decisively, with no compunction—the appetite, if you will, to kiss a frog or two in the search for that one and only. Today, absent a clear, sustainable, viable demand for new homes, land is like that; you've got to buy it to be rid of it—it's like having to swallow poison to grow strength enough to overcome its ill effects.

Atlanta-based Ashton Woods—which like others that beelined from living large in 2006 to a near-death experience by late 2008—may be one of private home building's count-on-two-hands examples of such a firm. Across its eight divisions, its 12 months ahead look to management like an unevenly distributed average of 150 home closings per division.

FROM SURVIVAL TO GROWTH MODE Unlike eight or so now-defunct home building companies that ranked higher than it did in the peak year of 2006—when its 2,471 homes generating $735 million in revenue earned it a 37th wrung on the BUILDER 100 ladder—Ashton Woods could reach further down into itself when its lot values—especially in South Florida, Arizona, and the Atlanta area—went splotch, and the bank covenant alarms all blared in protest. Instead of coming up against a hollow echo of empty coffers and a pack of good intentions like those eight other firms, Ashton Woods came up with cash, a newfound sense of gut survival instinct, and a plan.

Photo: Bob Mahoney

During a death-defying stretch in 2009, Ashton Woods swapped its nearer-term debt for more ramp-way to pay it back, at a higher cost, of course; in 2010, it secured $75 million in expansion capital from investors who don't want their names publicized, and got a $10 million adrenaline boost of new equity from its Toronto-based Great Gulf Group majority owner. Too, it went from an eight-bank revolver at risk to a two-bank renewed $35 million revolver its management doesn't intend to touch.

And just like that, with $80 million in fresh funding, Ashton Woods went from life support to a place brim with financial feistiness. Other private building companies continued to succumb to the gravity of their land debts turning upside down, and lay powerless to move either to avert added peril or leap toward a flash of redemption. Ashton's management scrubbed its balance sheet, gulped its medicine, and got around to the business of preserving what may have been one of its more precious assets—its ability to pro forma forward sales based on its current pace.

Equal parts business model and belief system, Ashton Woods has shaped itself into home building's version of the Bionic Man—public company pedigree on a private company budget, value system, and DIY-corporate culture. Among corporate and divisional leaders, Ashton Woods' 12-member brain trust represents 200-plus years of home building experience, and every one of its key talent spent formative years with publics—mostly Centex, Pulte, Lennar, Beazer, KB Home, and Toll Brothers. Great Gulf Group president and CEO Jerry Patava doesn't mince words about his expectations for the company's operations south of the Canadian border.

Learn more about markets featured in this article: Atlanta, GA.