JACKSONVILLE, Fla., Oct. 05, 2021 (GLOBE NEWSWIRE) – Dream Finders Homes, Inc. (NASDAQ: DFH) today announced that it has acquired the residential construction, mortgage banking and title insurance assets of the private Texan builder McGuyer Homebuilders, Inc. and related affiliates (collectively “MHI”) for $ 471 million in cash at closing, subject to post-closing adjustments.
The acquisition will significantly expand DFH’s geographic operations in the Austin metro area and allow DFH to expand into the attractive Texas markets of Houston, Dallas and San Antonio. The assets acquired include 1,850 housing sites, an order book of 1,845 housing units valued at over $ 1 billion and 5,500 units under control. Following the acquisition, DFH will own or control more than 40,000 lots.
Patrick Zalupski, President and CEO of Dream Finders Homes, Inc., said, “We are very excited about the future. MHI has always been recognized as one of the best home builders in the country and the company has built an impeccable reputation over the past 30 years. We believe we can provide capital and efficiencies to help the current team grow well beyond their 2,000 homes produced each year. We also believe that we have structured the transaction in a very accretive manner for DFH shareholders, which allows us to maintain our lean business model and generate some of the best returns on shareholder capital in the industry. ”
Highlights of the offer:
- DFH has acquired an order book of 1,845 units which is expected to generate revenues in excess of $ 1 billion over the next 12 to 18 months.
- The majority of the assets acquired are homes under construction, which are expected to be delivered from the period immediately after closing and over the next 270 days.
- MHI’s stakeholders retained approximately $ 100 million of finished lots previously held on the balance sheet, effectively restructuring MHI as a lightweight home builder. This land bank structure offers DFH the possibility of withdrawing host sites retained for a period of 2 years after the acquisition, and will remain in place as a revolving facility to finance future land acquisition activities from MHI off balance sheet.
- In a second close in the fourth quarter of 2021, DFH plans to acquire MHI’s 90-unit model home portfolio with an estimated retail value of $ 65 million. DFH plans to market this portfolio to investors under a sale-leaseback arrangement, immediately generating significant cash flows that the Company expects to use to repay its outstanding debt under the non-credit facility. guarantee.
- DFH has issued convertible preferred shares which are fully redeemable at the option of the company in years 4 and 5, with the objective of zero dilution for shareholders at a competitive annual rate of 9%.
MHI, doing business as Coventry Homes, built in the Texas markets of Houston, Dallas, Austin and San Antonio, has been operating since 1988 and has closed more than 55,000 homes. MHI primarily serves home buyers who scale with prices ranging from $ 300,000 to over $ 700,000, and has over 100 active selling communities.
As part of the asset acquisition, the CEO of MHI and all of their employees will remain with the combined company and continue to operate the existing and new host communities under the Coventry Homes brand.
To complete the transaction, DFH used cash of $ 20 million and issued 150,000 newly designated Series A Convertible Preferred Shares with an initial liquidation preference of $ 1,000 per share and a par value of $ 0.01 per share for an aggregate purchase price of $ 150. million. In addition, DFH increased the total commitments under its senior unsecured revolving credit facility to $ 818 million and, concurrent with the closing of the acquisition, repaid MHI’s vertical lines of credit for approximately $ 300. millions of dollars.
DFH is committed to its lean business model and continues to hold off-balance sheet land, maintaining its discipline of carrying outstanding debt against the work-in-progress inventory only, which is short term nature.
The acquisition of MHI is the fourth in DFH’s history since May 2019.
Builder Advisor Group served as exclusive M&A advisor to MHI in the transaction and acted as sole placement agent in the issuance of preferred shares for DFH.
About Dream Finder Homes, Inc.
Dream Finders Homes, Inc. is headquartered in Jacksonville, Florida, and is one of the fastest growing home builders in the country, with the highest returns on equity in the industry. Dream Finders Homes build homes in Florida, Texas, North Carolina, South Carolina, Georgia, Colorado, Virginia, and Maryland. Dream Finders Homes achieves industry leading growth and returns by maintaining a lightweight residential construction model.
Certain statements contained in this press release constitute “forward-looking statements” under federal securities laws. These forward-looking statements are intended to be covered by the safe harbor rules created by the Private Securities Litigation Reform Act of 1995. When we use words such as “anticipate”, “intend”, “plan”, “believe”, “ . These forward-looking statements regarding future events include, but are not limited to: future levels of annual domestic production of MHI; the accretive nature of the acquisition of MHI; the maintenance by DFH of the best returns on equity in the sector; the level of shareholder dilution resulting from the issuance of convertible preferred shares; the anticipated timing and ability to complete the acquisition of the model home portfolio and subsequent sale-leaseback arrangement; expectations of employees; the ability to integrate the MHI acquisition and achieve the expected operational and financial benefits on time; and market conditions and possible or suspected future operating results, including statements regarding DFH’s strategies and expectations with respect to market opportunities and growth. All forward-looking statements are based on the beliefs of DFH as well as on the assumptions made by and information currently available to DFH. Actual events and / or results may differ materially and negatively from these forward-looking statements due to certain risks and uncertainties, including, but not limited to, DFH’s ability to successfully integrate acquired assets and transferred employees. in the acquisition of MHI; the risk that DFH will not realize the expected benefits of the acquisition of MHI; the risks that the acquisition of MHI will disrupt current plans and operations and the potential difficulties in retaining employees as a result of the acquisition; the negative effects of the COVID-19 pandemic on the business, financial conditions and operating results of DFH, as well as on its suppliers and business partners; the adverse effects of the COVID-19 pandemic and other economic changes, either nationally or in the markets in which DFH operates, including, among others, increased unemployment, volatility in employment rates mortgage interest and inflation and falling house prices; a slowdown in the residential construction industry or changes in population growth rates in DFH markets; and other risks and uncertainties described herein, as well as the risks and uncertainties discussed from time to time in DFH’s other reports and other public documents filed with the SEC, including, but not limited to, those detailed in DFH’s annual report on Form 10-K for the fiscal year ended December 31, 2020 (and / or its most recent quarterly report on Form 10-Q), filed with the SEC. DFH assumes no obligation to update or revise any forward-looking statement, except as required by applicable law.
SOURCE: Dream Finder Homes, Inc.
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