TRI Pointe Homes Inc. continues to build the foundation of an ambitious growth plan in 2015, despite some lingering questions over the health of the national homebuilding industry.
The Irvine-based homebuilder—which in July completed its $2.8 billion merger with the homebuilding operations of Federal Way, Wash.-based timber conglomerate Weyerhaeuser Co.—last month announced a package of new services for customers, including title insurance and mortgage offerings.
The offerings have a local tie. TRI Pointe is partnering with First American Title Insurance Co., a unit of Santa Ana-based First American Financial Corp., to offer an in-house title agency. The new unit will be called TRI Pointe Assurance.
The builder also is working with Imortgage, a division of LoanDepot LLC in Foothill Ranch, to provide mortgage-related services under the TRI Pointe Connect name.
Adding the ancillary businesses is “a big part of growing our company,” TRI Pointe Chief Executive Doug Bauer told the Business Journal. “We were one of the few national builders that didn’t have” those services.
Customers
The goal is to give customers an end-to-end homebuying and closing process while also boosting company revenue and earnings through the extra services.
“I don’t think that we’ve been losing sales by not having that (service package) in-house, but I do believe we can provide a much better customer experience and provide a much better service,” said Bauer, speaking this month after TRI Pointe’s third-quarter earnings results, the first to feature the combined operations of Weyerhaeuser’s business and the pre-existing company.
The combined companies reported $471.2 million in home sales last quarter, with 842 home closings.
The average sale price for a TRI Pointe home was $560,000, and the company reported that its homebuilding gross margin was 22.7% for the quarter.
Having a front-end mortgage business in place will “make a big difference relative to our ability to increase sales, and certainly maintain that sales pace that we’re looking forward to,” Bauer said. “And then on the title side, we see that as an ancillary business and service, that will provide us great visibility to get the products closed.”
The new offerings are in startup stages.
TRI Pointe Connect will be launched across all of the company’s brands by mid-2015, while the title insurance offering is beginning in Texas and will be rolled out in other markets on a state-by-state basis.
Bauer said the new offerings should result in some new jobs for the OC operations of TRI Pointe, which is planning to move to larger headquarters at the Impac Center office campus in Irvine this month.
25% Growth
The in-house offerings are expected to help TRI Pointe meet its goal of growing sales in 2015 despite sluggish sales in some of its core markets.
It said in this month’s earnings announcement that it is looking to boost sales by about 25% from current levels.
The company expects to see about 3,400 home sales by the end of 2014 from the combined operations of TRI Pointe and the five builders that were purchased from Weyerhaeuser.
The company forecasts that its combined companies will exceed 4,200 home sales next year.
“We’re poised for growth in all of our brands,” Bauer said. “We’re pretty excited about next year.”
Rankings
The level of sales TRI Pointe is expecting next year would have placed the company in the No. 13 spot among national homebuilders in terms of sales, according to the most recent data from trade publication Builder Magazine.
Irvine-based Standard Pacific Corp., the largest homebuilder based in Orange County, ranked 12th among builders nationally last year, with 4,627 sales.
Newport Beach William Lyon Homes was No. 31 with 1,435 sales last year, while Aliso Viejo-based New Home Co. was No. 93 with 424 sales.
The stand-alone operations of TRI Pointe ranked No. 82 with 459 sales last year, while Weyerhaeuser was No. 17 with 2,939 sales, according to Builder Magazine’s data.
TRI Pointe’s growth for 2015 is not predicated on a surge in housing demand on a national basis.
“It’s based on current market conditions, which are still pretty choppy,” Bauer said.
The company, nonetheless, expects to be able to take advantage of a disciplined operating strategy, a strong balance sheet, and good land positions to boost sales, even if the sales environment remains “softer than we would like,” Bauer said.
California
California—home to most of TRI Pointe’s legacy business, as well as Pardee Homes, one of the larger Weyerhaeuser units—is expected to provide an outsized source of business. Nearly 64% of the roughly 30,000 lots TRI Pointe owned and controlled as of Sept. 30 are in California, according to the company.
The company is still on the lookout for more land in the state, but “it’s still a competitive marketplace,” Bauer said.
Land deals in California are being underwritten in the 18% to 22% range, the company said.
