PulteGroup, Inc. announced earlier this week that it plans to purchase a massive portfolio of land and houses from John Wieland Homes and Neighborhoods for between $430 million and $450 million.
According to a release from PulteGroup, it reached an agreement to acquire “certain homebuilding assets” of John Wieland Homes and Neighborhoods, from affiliates of Wheelock Street Capital, L.L.C. and the Wieland family.
Under the terms of the deal, PulteGroup expects to acquire approximately 7,400 controlled lots and 280 homes that are “in backlog.”
According to Richard Dugas, the chairman, president and chief executive officer of PulteGroup, the acquisition will help PulteGroup grow in the Southeast.
In its release, PulteGroup notes that Wieland ranks among the country's 100 largest homebuilders and is a leading builder of luxury homes in Atlanta, Charleston, Charlotte, Nashville and Raleigh.
According to PulteGroup, during the 12 months that ended Sep. 2015, Wieland delivered approximately 565 homes at an average selling price of $495,000 and generated $280 million in revenue.
"Population growth and housing demand in the Southeast are expected to remain strong for years to come, so this acquisition of the John Wieland Homes and Neighborhoods brand and its robust land pipeline provides a great opportunity to increase our market share and operating leverage in five important cities, while expanding our presence in the luxury segment,” Dugas said.
"We have tremendous respect for the experienced team within the Wieland organization, the quality of the homes they deliver and the strength of the Wieland brand," Dugas said. "Upon completion of the transaction, we will move quickly to capture operational efficiencies while working to grow annual production volumes."
According to PulteGroup, the deal is expected to close “no later” than the first quarter of 2016.
The company plans to use cash on hand to fund the purchase price of approximately $430 million to $450 million, subject to any final post-closing adjustments.
PulteGroup said that it expects this transaction will be immediately accretive to earnings and cash flows.
"Having worked for Pulte earlier in my career, I have a strong appreciation for the proud history, reputation for quality and dedicated professionals in each organization," said Gregory Huff, chief executive officer of John Wieland Homes. "We look forward to joining a national homebuilder where we share the same beliefs with regard to delivering superior product quality and outstanding service to our customers."