News & Opinions
The latest news and insights from Hanley Wood’s outspoken experts and key thought-leaders throughout the residential and commercial design and construction industry.
To The Rescue
Teresa Burney / BUILDER / May 13, 2013
Private equity funding plus public stock sales create a hybrid breed of builder with capital to buy land and grow.
Out of the furnace of the six-year housing meltdown has emerged a new breed of home builder—a hybrid infused with private equity funding, private builder agility, and access to low-cost capital thanks to the power of Wall Street ticker symbols.
These newly minted hybrid builders have advantages that many builders with older business models don’t have. First and foremost, they have money. Many were rescued by private equity funds that imparted them with capital to survive and to start reinvesting in land. Public stock sales will further fortify these builders’ cash balances, giving them the ability to borrow low-interest, long-term capital.
Second, most are free of legacy burdens leftover from the crash because they are either brand new or essentially new companies, their debts cleared by bankruptcy and/or paid off by private equity investors.
Tri Pointe Homes is a new company formed by three former William Lyon investors. So is the New Home Co., established by Larry Webb, former CEO of John Laing Homes. A group of investors severed Taylor Morrison from its British parent company, essentially creating a new company as well.
Meanwhile, William Lyon Homes, WCI Communities, and Orleans Home Builders received private equity help—plus trips through bankruptcy court—to render clean financial slates.