photovs/iStock via Getty Images
- Dream Finders Homes (NASDAQ:DFH) has acquired the homebuilding, mortgage banking and title insurance assets of Texas-based homebuilder McGuyer Homebuilders (MHI) and related affiliates for $471M in cash.
- To consummate the transaction, DFH used cash on hand of $20M, and issued 150,000 shares of newly-designated Series A Convertible Preferred Stock with an initial liquidation preference of $1,000 per share and a par value $0.01 per share for an aggregate purchase price of $150M. Additionally, the company increased the aggregate commitments under its senior unsecured revolving credit facility to $818M, and paid off MHI’s vertical lines of credit facilities for ~$300M.
- The acquisition covers 1,850 home sites, a backlog of 1,845 homes with a value in excess of $1B and 5,500 lots under control. 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, doing business as Coventry Homes, builds in Houston, Dallas, Austin and San Antonio, Texas and has closed has closed over 55,000 homes. MHI's CEO and all of its employees will remain with the combined company and continue to operate the existing and new home communities under the Coventry Homes brand.
- The deal restructures MHI as an asset-light homebuilder, with its stakeholders retaining ~$100M of lots previously held on balance sheet. This land bank structure provides DFH the option to take down the retained home sites over a 2-year period post-acquisition, and will remain in place as a revolving facility to fund MHI's future land acquisition activity off-balance sheet.
- DFH's geographic operations in the Austin metro area will significantly increase thanks to the deal. It will own or control over 40,000 lots as a result of the acquisition.