Another Local Homebuilder Taken Out

Large local Homebuilders continue their vanishing act.

This week it was Pacific Ridge that was bought out.

D.R. Horton buys small home builder in Seattle

The $72,000,000 buyout  included 350 lots, 90 homes in inventory and 40 homes in sales order backlog. Horton also acquired control of about 400 lots through option contracts.  DR Horton was the largest Homebuilder in the NW prior to the purchase so the acquisition was a means of securing more lots.  This will help Horton cement their position in Snohomish County.  The optioned purchases are a very nice feature for both Pacific Ridge as well as the landowners as Horton will most certainly exercise the options, cashing out the owners, while they undoubtedly didn't cost Pacific Ridge much to put in place but probably received top dollar for them from Horton.

This deal puts a new twist in the trend of National builders seeking market share in the Puget Sound area.  Most prior transactions involved new National's moving into the Puget Sound Market.  This could be viewed as a defensive maneuver by Horton by taking out a possible candidate for other National's looking to move in.  Make no mistake, the Bigs want into the NW.  The list of new Nationals is growing ever longer and include Richmond America who bought SDC, Mainvue that bought Bennett Homes, and Newland Communities that bought the MPD Tehaleh, all during 2011.  Soon after Toll Brothers bought out Camwest while Lennar took out Premier Communities.  Tri Pointe Homes pulled off the largest purchase to date which was the 2014 buyout of Quadrant, the perennial 800 lb gorilla in the NW.  Not long after William Lyon Homes took Polygon off the list of large local builders.  The list of the largest builders in the NW now resembles most markets around the country.  Builder Magazine ranked the top ten builders in 2014 as follows: DR Horton, Pulte, William Lyon, Lennar, Tri Pointe, Toll, Richmond, Mainvue, MF and Shea.  The lone local builder on the list is Murray Franklyn.   This is a far cry from 2009 when only Horton would have made the list.  

The strategy is quite simple for the remaining locals.  Tie up as much property as possible, preferably using options and Notes Payable.  Hammer in a For Sale sign at the corporate office and wait for the phone to begin ringing.  

  

 

Read more here: http://www.star-telegram.com/news/business/article19714767.html#storylink=cpy