Dream Finders Homes, Inc. (NASDAQ: DFH) disclosed that it has purchased the homebuilding, mortgage banking, and title insurance assets of privately held Texas homebuilder McGuyer Homebuilders, Inc., and related affiliates which are collectively called MHI. The firm has purchased the assets of MHI for $471 million in cash at closing.
MHI has been steadily considered as one of the nation’s top homebuilders and the firm has gained an impeccable reputation over the past 30 years. DFH contemplates that it will deliver capital and efficiencies to assist the current team to get the progress well beyond its 2,000 homes produced each year.
Acquisition Rationale
The purchase will substantially grow DFH’s geographic operations in the Austin metro area and will enable DFH to develop into the alluring Texas markets of Houston, Dallas, and San Antonio. The assets which the firm has purchased cover 1,850 home sites, a backlog of 1,845 homes with a value above $1 billion, and 5,500 lots under control. As a result of the purchase, DFH will hold more than 40,000 lots.
Financial Details
As per the acquisition agreement, MHI stakeholders hold nearly $100 million of completed lots earlier held on the balance sheet, effectively restructuring MHI as an asset-light homebuilder. This land bank structure offers DFH the option to take down the retained home sites over 2 years post-acquisition and will remain in place as a revolving facility to fund MHI’s future land acquisition activity off-balance sheet.