Newport Beach-based William Lyon Homes Inc. is wrapping up a busy year by acquiring the assets of a Denver-area homebuilder.
The privately held company said last week it had bought the assets of Village Homes, a longtime builder in metropolitan Denver, Fort Collins and Granby in Colorado.
Terms of the deal weren’t disclosed. In 2009 the Village Homes assets traded hands for $21.9 million.
Buying the Greenwood, Colo.-based company “is consistent with our strategy of operating and gaining market share in the best homebuilding markets in the Western United States,” said William H. Lyon, president and chief operating officer.
Several national reports point to Denver as one of the better-performing larger housing markets in the U.S., thanks in large part to a low rate of homes in foreclosure. Home prices in and around downtown Denver have risen this year to an average of $285,000, putting prices up near their 2007 levels, according to Metrolist, a local market tracker.
William Lyon Homes’ deal for Village Homes marks its entry into the Colorado market. The company and its predecessors have built more than 74,000 homes during the past 50 years in Colorado, California, Arizona and Nevada.
Village Homes owns and controls more than 700 lots, and its backlog of sold homes still to close is valued at $34 million. Its homes have sold for an average price of $380,000 this year.
William Lyon Homes and affiliates—prior to last week’s deal—owned more than 11,400 lots valued at $369 million, according to regulatory filings. More than 1,200 of the lots are in Southern California.
“We feel this transaction will benefit the combined companies from day one and for many years to come,” said Lyon, son of company founder and Chairman Gen. William Lyon.
Village Homes will become a division of William Lyon Homes. Its president, Eric Eckberg, will run the division.
Down Sizings
Village Homes and William Lyon Homes each downsized operations during the last housing downturn, which forced both companies into bankruptcy reorganizations.
Village Homes, which started in 1984, filed for bankruptcy protection in 2008, listing $103.9 million in assets and $138.4 million in liabilities. It was Colorado’s largest bankruptcy of the year, according to local reports.
Most of the company’s assets were bought out of bankruptcy by a joint venture between Los Angeles-based Lowe Enterprises and Homebuilder Capital Solutions LLC of Louisville, Colo., in 2009.
William Lyon Homes emerged from bankruptcy this year in a restructuring that saw the builder reduce its debt load by about $180 million while ultimately getting $125 million in new equity investment.
Hedge Funds
Several hedge funds snapped up sizable stakes in the company this year, which left Gen. Lyon and his family with a 20% interest and warrants to buy an additional 9% of the company’s common stock.
Lyon and his family, prior to bankruptcy, had owned about 95% of the company, which he took private in 2006.
Its latest deal “caps a year of growth and change” at the builder, Executive Vice President Matthew Zaist said.
Among other balance-sheet moves, the company last month completed a capital markets transaction that resulted in the sale of $325 million of unsecured bonds, which the builder used to refinance existing secured debt, Zaist said.
In July, William Lyon Homes announced it was buying 165 acres of land in California, Arizona and Nevada that should hold more than 1,000 home lots. The land sold for $21.5 million.
Tri Pointe
William Lyon Homes is the second Orange County-based homebuilder to target the Denver area as a new market in recent months.
Irvine-based Tri Pointe Homes said in September it would start up a Colorado division. It hired Matt Osborn, a 20-year veteran of Village Homes, to run the division.
Tri Pointe was founded in 2009 and has several executives formerly of William Lyon Homes. California had been its only market prior to the Colorado expansion.
