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TRI Pointe’s ‘transformative transaction’ takes firm to Top 10

On Behalf of | Jul 11, 2014 | Mergers & Acquisitions

A fairly recent entry into Southern California’s homebuilding network has forged a deal with Weyerhaeuser Co. that increases its annual sales volume sevenfold. Builder Magazine reports that TRI Pointe Homes Inc., based in Irvine, is now one of the country’s top 15 homebuilders in sales volume and top 10 in stock value. That is impressive growth for a company that opened its doors just five years ago.

The particulars of the transaction have been reported as follows: TRI Pointe paid $739 million for Weyerhaeuser’s five building firms. Weyerhaeuser stockholders also gained control of the new company with 80.5 percent of the stock. The companies finalized the deal earlier this week.

TRI Pointe’s management team will apparently be in charge, and its chairman of the board will continue to hold that position. The individual company names will stay, as well, to retain their regional identities. As a combined entity, though, they would appear to all benefit from economies of scale. The new TRI Pointe should also have more clout in the marketplace, which should make acquiring large parcels and better financing rates easier.

What might give the company its competitive edge — what makes this a “transformative transaction” — is the number of developable lots added to its portfolio, according to TRI Pointe’s CEO. The Weyerhaeuser firms bring almost 27,400 parcels with them, with 16,000 of those in California. There are also properties in Washington state, Washington, D.C., Texas, Nevada and Arizona.

This transaction would appear to take the pressure off the “old” TRI Pointe to try to break into some tough markets. The company reportedly does not, however, intend to change its focus. Don’t expect any mega-developments from TRI Pointe. The company says it will continue to focus on smaller and mid-sized developments with between 100 and 500 units each.

Source: Orange County Register, “Deal vaults Irvine builder into top ranks,” Jeff Collins, July 8, 2014